Tether, recognized as the largest stablecoin globally, has strongly criticized a recent report from Deutsche Bank that cast doubt on the stability of stablecoins and Tether’s financial soundness.
The research, released on May 7, delved into the history of 334 currency pegs dating back to 1800 and found that only 14% endured over time. Deutsche Bank‘s analysts then applied this historical analysis to stablecoins, expressing concerns about the asset class, which they perceive as susceptible to “turbulence and de-pegging events.”
“While some stablecoins may persist, many are likely to falter, primarily due to the lack of transparency in their operations and susceptibility to speculative pressures,” the report highlighted.
The study specifically scrutinized the collapse of the TerraUSD stablecoin in May 2022, an incident that erased nearly $45 billion from the global crypto market within a week. It underscored the inherent risks and volatility associated with stablecoins, emphasizing the importance of enhanced transparency and regulatory supervision.
Deutsche Bank also voiced reservations about Tether’s stability, questioning its solvency and impact on the crypto derivatives market. The report warned of potential significant losses in a scenario dubbed a ‘Tether peso moment,’ which could severely affect leveraged traders and disrupt the broader crypto ecosystem.
Moreover, Deutsche Bank‘s survey of over 3,350 consumers across six countries in March revealed that only 18% anticipate stablecoins thriving, while 42% anticipate a decline. The survey spanned France, Germany, Spain, Italy, the UK, and the United States.
The research team at Deutsche Bank also raised concerns about Tether‘s dominance, given its perceived monopoly in the stablecoin market and its influence in the derivatives sector.
“Therefore, the observed 30% de-peg rate among certain stablecoins is hardly unexpected, and many failed stablecoins are challenging to account for,” the analysts observed.
Tether dismissed the report, criticizing it for lacking “clarity and substantial evidence,” and relying on “vague assertions rather than rigorous analysis.”
The stablecoin provider asserted that the research failed to offer concrete data to support its predictions of a decline in the stablecoin market.
Summary Review: The clash between Tether and Deutsche Bank highlights ongoing debates surrounding the stability and viability of stablecoins, particularly Tether, in the cryptocurrency market. While Deutsche Bank’s report raises valid concerns about the historical track record of stablecoins and Tether’s influence, Tether’s rebuttal emphasizes the need for rigorous analysis and concrete evidence to support such assertions. The evolving landscape of stablecoins underscores the importance of transparency, regulatory oversight, and market confidence in ensuring the stability and sustainability of these digital assets. As the crypto market continues to mature, it will be essential for stakeholders, including regulators, investors, and stablecoin issuers like Tether, to address these concerns collaboratively and transparently to foster trust and confidence in the broader cryptocurrency ecosystem.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
