Tether's circulation exceeds $50 billion, surpassing the deposits insured by most banks in the United States

This article comes fromBloomberg, original author: Olga Kharif

Odaily Translator | Nian Yin Si Tang

This article comes from

Bloomberg

, original author: Olga Kharif

Odaily Translator | Nian Yin Si Tang

Tether (USDT), a crypto stablecoin backed 1:1 by fiat currencies, surpassed $50 billion in circulation, a figure that exceeds the insured deposits of all but 44 of the thousands of U.S. banks.

It's an impressive milestone for a payment method token widely used in the crypto ecosystem, even as the eponymous private company behind it has come under regulatory scrutiny over the opacity behind its vast reserves of tokens.

Tether will release its first quarterly reserve report to the New York Attorney General this month. The disclosure is part of Tether's efforts to resolve a long-running dispute with state regulators over whether it actually has enough reserves, but it's unclear whether investors will be informed.

According to news on February 23, Bitfinex and Tether have reached a settlement with the New York State Attorney General's Office on the Tether case that began two years ago. Bitfinex and Tether pleaded not guilty to any wrongdoing and agreed to pay $18.5 million as part of the settlement. Bitfinex and Tether said they provided more than 2.5 million pages of documents to the New York State Attorney General's Office to settle the matter. As part of the settlement, Tether will voluntarily provide updates on USDT reserve backing to the New York Attorney General’s Office and the public.

But none of that seems to be what Tether investors care about. Despite the legal battle, the token continued to grow in popularity and became the most traded cryptocurrency in the world, surpassing even market leader bitcoin. Traders and speculators use USDT to trade on cryptocurrency exchanges such as Binance and park assets to avoid extreme price volatility in the industry.

"On these offshore exchanges, Tether is the main type of collateral and margin." Nic Carter, co-founder of the research firm Coin Metrics, said, "Exchanges such as Binance are seeing an increase in trading volume. For traders, To get access to these crypto-only exchanges, they usually prefer a stablecoin like Tether. You can think of the supply of Tether as the ratio of the crypto-only exchanges and the funds trading crypto on those exchanges. A transparent proxy for the balance sheet.”

According to data tracker CryptoCompare, about 66% of all Bitcoin purchases are via Tether. Tether’s use may expand further since Coinbase Global Inc., the largest U.S. crypto exchange, plans to allow USDT to be traded on its Coinbase Pro platform.

The aforementioned quarterly report will be released to the New York Attorney General in May, according to Stuart Hoegner, general counsel for Bitfinex and Tether. The companies, largely based in the British Virgin Islands, settled without admitting or denying any wrongdoing.