Tether had been fined $41M by the CFTC for making false claims about its reserve holdings.
Ripple anticipated that the stablecoin market would surpass $3 trillion by the year 2028.
Recently, Deutsche Bank’s research analysts sounded the alarm about the stablecoin industry, predicting that the majority of pegged currencies would eventually collapse. Deutsche Bank examined 334 currency pegs and discovered that just fourteen percent had prevailed so far.
An analysis by the analysts concluded, “Some may survive, although most will likely fail.” However, major industry participants like Ripple anticipate that the stablecoin market would surpass $3 trillion by the year 2028.
A Looming Threat?
It is well-known that stablecoins often continue to have a peg of one to one with fiat currencies like the dollar, euro, etc. Stablecoins provide crypto investors a convenient way to trade in crypto while also safeguarding them from price fluctuations.
With a market valuation that surpasses $100 billion, Tether Holding Ltd.’s USDT token often trades at a higher volume than Bitcoin does in a day. Two years ago, at least $40 billion worth of cryptocurrency was lost when Terraform Labs’ algorithmic stablecoin TerraUSD and its counterpart Luna collapsed. This collapse serves as a significant illustration of possible hazards.
The legitimacy, reserve backing, and strict operational controls necessary for pegged currencies to endure, say experts at Deutsche Bank, are absent from a number of prominent stablecoins at the moment.
Given Tether’s dominating position in the stablecoin market, which is marked by speculation and a lack of transparency, the research team raised concern about it. In particular, they brought attention to the fact that Tether had previously been fined $41 million by the Commodity Futures Trading Commission (CFTC) for making false claims about its reserve holdings.
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