Will Tether Issues Bleed Into Other Crypto?

2021-07-29

The market is swirling with questions about Tether.

At the heart of the issue is that Tether is considered the largest “stablecoin” in the cryptocurrency markets. Stablecoins act as dollar proxies with a value considered at a 1:1 ratio to the U.S. dollar.

The process is that someone with dollars who needs to trade within the cryptocurrency ecosystem can use the stablecoin Tether. Dollars are exchanged with Tether which “issues” new Tether for cryptocurrency needs. Tether is a common gateway to Bitcoin.

This all sounds good and well… as long as Tether maintains equal dollar value. If not, the digital coin may not be so stable anymore.

The value and stability of Tether — and all cryptocurrency — has been questioned for years. Recently Tether executives have faced renewed scrutiny into potential financial fraud as they developed the stablecoin over the years.

Because Tether has been considered a marker for stable liquidity within the digital currency market, any criminal finding could send shockwaves through the cryptocurrency ecosystem.

And what digital coin is the vanguard operator in that ecosystem? Bitcoin.

If the keystone stablecoin is suddenly not stable or liquid, Bitcoin and competitors could appear less desirable to investors and traders. This could then spur governments to pursue more regulatory control.

But could Tether’s issues ultimately produce a positive outcome for cryptocurrency in the long run?

Should Tether fail or weather the storm, the dark cloud about its stability and liquidity would vaporize in either scenario. Other cryptocurrency might then be able to take on the mantle of stability and prove its worth without a cloud of doubt hovering overhead.

Active forms of currency have all weathered ups and downs, crashes and valuations, and ultimately stabilized into some degree of value and accepted use within financial environments.

Current questions regarding Tether may force the stablecoin to “put up or shut up” relative to its stability and liquidity. The process may be brutal in the short term, but may prove beneficial to the cryptocurrency ecosystem as digital money strives for universal legitimacy.

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