Deltecbank, a Tether banking partner recently revealed that they own a position in Bitcoin which under normal circumstances would be bullish news, however, given NYAG lawsuit against Tether and Bitfinex for manipulation of funds and Tether being a stablecoin issuer makes it quite a tricky situation and not a good one for Tether.
Deltecbank’s chief investment officer Hugo Rogers in a year-end review interview with Bloomberg revealed that they have been investing their investor’s money in bitcoin ever since the top cryptocurrency was trading around $9,300 in May 2020. During the interview Rogers said,
“We bought bitcoin for our clients at about $9,300 so that worked very well through 2020 and we expect it to continue working well in 2021 as the printing presses continue to run hot”
Tether in the past has been accused of not maintaining a 100% treasury for the circulating USDT supply in the market. The stablecoin issuer at the start rubbished those claims but when the NYAG filed the lawsuit against the firm, it quietly changed the fact that only 70% of the USDT is backed by equivalent US Dollar reserve while the rest is backed by a portfolio of assets which many claimed also included Bitcoin.
As per US banking laws for non-banking commodities dealing in issuing dollar equivalent currency or contract, the issuer must back all contracts with an equivalent reserve in either the commodity it is backed against or assets equivalent to it. Thus Deltecbank’s move might backfire.
7:20 in the video Deltecbank has a “large” position in bitcoin, but Tether absolutely has nothing to do with it, right ? @BennettTomlin @CasPiancey But great to hear tethers other assets also did well in 2020. https://t.co/xbT9bSR6wt
— lenne (@lenne0816) January 14, 2021
Deltecbank Revelation Might Brew Trouble For Tether
Tether and Bitfinex lawsuit is still going on and January 15 holds an important date as it is the deadline given by the court to Tether to reveal its business practices and its treasury audit which the company has sighed away for a long. The revelation by its banking partner regarding the purchase of bitcoin from its investor’s money could only help NYAG in building its case against the stablecoin issuer.
The whole crypto world is eagerly following the updates in what could potentially dethrone Tether as the market leader. The recent OCC greenlight to use stable coin and blockchain by federal banks would mark the beginning of a new era for digital currency specially stablecoins. Many private stablecoins would crop up which is means the competition would soar. At this important junction Tewther which currently holds a market dominance of over 90% can lose its market lead owing to the lawsuit.