Hedge funds’ Tether attention trigger calls for transparency

Regulators need to step up scrutiny on Tether amid fresh turbulence hitting the crypto industry, affirms the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.


The comments come from deVere Group’s Nigel Green following reports that some hedge fund firms are shorting Tether, the world’s third-most traded token.


Tether (USDT) is a stablecoin, meaning it is pegged to a currency, in this case, the U.S. dollar. Stablecoins’ name highlights the idea that the peg supposedly makes them less volatile than cryptocurrencies such as Bitcoin or Ether, which can vary widely in value.


When a stablecoin is established, there is a reserve for the assets, which are held as collateral.


The deVere CEO says: “Following weeks of turmoil in crypto, there’s now another matter on the horizon: the reports that some hedge funds are shorting Tether, the $66 billion stablecoin.


“If true, it suggests that they are hoping to cash in on bets of issues with the token. It signals that they believe recent turbulence in the market could drag Tether’s value below its flagged-up 1-to-1 exchange with the U.S. dollar.


“This scenario would be extremely damaging to the wider digital assets ecosystem.”


He continues: “How Tether is backed remains a mystery – there are no undisclosed audits. But due to its promise of 1-to-1 with the dollar, it should have at least $66 billion in reserves to support the coin.


“With all the recent drama in the crypto market, we urgently need greater transparency. I am calling on Tether to reveal the extent of their holdings to finally put to bed the speculation, which drives fear, uncertainty and doubt.”


Nigel Green is also calling for greater regulatory scrutiny of the token and the wider industry.


“The U.S. Commodity Futures Trading Commission (CFTC) stated in its recent court filing against FTX founder Sam Bankman-Fried that digital assets like Tether are commodities. As such, they have the authority to ramp up their oversight on the token.”


deVere Group’s chief executive and founder is a long-time advocate of the regulation of cryptocurrencies as digital currencies are set to play an ever-greater role in the international financial system.


“What’s needed is a strong regulatory framework to be established and approved at an international level,” he says.


“Such regulation will help protect investors, tackle cryptocurrency criminality, and reduce the possibility of disrupting global financial stability, as well as offering a potential long-term economic boost to those countries which introduce it.”


Previously, he has noted that one of the best ways to address some of the regulatory issues is via exchanges.


“Nearly all foreign exchange transactions go through banks or currency houses, and this is what needs to happen with cryptocurrencies. When flows run through regulated exchanges, it will be much easier to tackle potential wrongdoing, such as money laundering, and make sure tax is paid.”


Nigel Green concludes: “As recent events underscore, greater transparency and regulation is urgently needed in the industry if the crypto ecosystem is to thrive and fulfil its massive potential.”

Facebook
Twitter
LinkedIn
Reddit
Email

The deVere Group of Companies, is licensed in various jurisdictions, however, the products and services offered by the respective entities may vary per jurisdiction. The deVere Group does not warrant, either expressly or implied, the accuracy, timeliness, or appropriateness of the information contained on this website. The deVere Group disclaims any responsibility for content errors, omissions, infringing material and any responsibility associated with relying on the information provided on this website. For more country-specific products and services offered by the deVere Group of Companies, you may wish to visit the specific national deVere website, if and where available. The information contained in this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved and your country of residence. Before making any decision or taking any action, you should consult a deVere Group Financial Advisor.

© 2010 – 2023 deVere Group. All rights reserved.

© 2010 – 2023 deVere Group. All rights reserved.

Tell Me More

What are you looking for?

Best Investments Now

Webinar Feb 10th - 9.15CET

Join deVereGroup CEO Nigel Green to stay informed about the best ways to grow your wealth As the economic landscape continues to evolve, it has become increasingly important to stay informed about the best ways to grow your wealth