Key Data

• Trading Name: Tether
• Legal Entities: Tether Operations Limited
• Activities: Stablecoin Issuer, Blockchain-Enabled Financial Services
• Location: United States
  
• Regulations: Subject to various regulatory oversight in different jurisdictions, with a focus on compliance and transparency.
• Key People: Paolo Ardoino  (Chief Executive Office)
• Latest news: Tether
• Latest update: September, 2024

Overview

Established in 2014, Tether is the largest stablecoin issuer by market capitalization. The US-based stablecoin scheme has pioneered the integration of traditional currencies into the digital realm through Tether tokens, which are pegged to the value of various fiat currencies like USD, EUR, and others. Tether appears to primarily operate offshore, outside of direct US regulatory oversight.

Key Features

Stablecoin: Tether provides a stable and familiar accounting unit by enabling transactions with traditional currencies using blockchain technology, thereby minimizing the volatility typically associated with digital currencies.

Blockchain Support: Tether tokens are built on multiple blockchains, including Bitcoin and Ethereum, allowing for versatile and widespread use across the cryptocurrency ecosystem.

Products and Services

Tether Tokens: The company offers a variety of tokens pegged to different fiat currencies, including USDt (USD), EURt (EUR), CNHt (CNY), and MXNt (MXN). Additionally, Tether provides a gold-backed token called XAUt.

Tether Gold: A digital token backed by physical gold, offering a stable asset that can be transacted on the blockchain.

Financial Situation

Tether’s financial situation is robust, driven by its position as the largest stablecoin by market volume. The company asserts that each Tether token (USDt) is backed by a reserve, which includes traditional currency, cash equivalents, and other assets. Tether publishes regular updates on its reserves to ensure transparency and instill confidence in its users. However, ongoing debates and legal scrutiny regarding the adequacy and composition of these reserves persist, which Tether has addressed through increased disclosures and audits.

Customer Feedback

Customer feedback on Tether is mixed. Many users appreciate the stability and liquidity that Tether tokens provide, especially in the volatile cryptocurrency market. Tether is widely used in trading, remittances, and as a means to move funds across exchanges, highlighting its utility and acceptance. However, concerns regarding Tether’s transparency and the consistency of its reserve backing continue to be voiced by some users. Despite these concerns, Tether remains one of the most trusted and utilized stablecoins in the market, reflecting a strong level of user confidence in its core offerings.

Key People

• Paolo Ardoino – Chief Executive Officer
• Giancarlo Devasini – Chief Financial Officer
• Stuart Hoegner – General Counsel
• Leonardo Real – Chief Compliance Officer
• Claudia Lagorio – Chief Operating Officer

Compliance Check

Tether is registered as a Money Service Business with the Financial Crimes Enforcement Network (FinCEN) in the US, but this is a basic registration rather than a comprehensive regulatory approval. Tether has so far expressed no intention of being licensed under the MiCA regime in the EU. This could become critical for the use of USDT in the EU. Several major cryptocurrency exchanges, including Binance, OKX, and Kraken, have begun restricting or considering delisting Tether’s USDT for European users to comply with MiCA.

Regulatory Scrutiny: Tether has faced scrutiny over the years regarding its reserves and transparency, but it remains the most widely used stablecoin, indicating a level of trust in its operations despite ongoing debates. Tether has faced regulatory scrutiny in the US, including a $18.5 million settlement with the New York Attorney General in 2021 over lack of transparency regarding its reserves

News Highlights: Tether has been proactive in assisting the U.S. Department of Justice (DOJ) in criminal investigations, emphasizing its commitment to compliance and legal standards.

Rating Conclusion

Tether operates as the largest stablecoin issuer, with a significant presence in the cryptocurrency market. Despite being a key player, the company has faced ongoing scrutiny regarding its regulatory compliance and transparency, particularly related to the backing of its reserves. While Tether has not been formally penalized for major compliance violations and continues to cooperate with regulatory authorities, the concerns raised warrant a cautious approach. Therefore, Tether is placed on our Yellow Compliance List, indicating a need for ongoing vigilance in regulatory matters.

On the other hand, while Tether remains widely used and trusted within the crypto community, mixed customer feedback, primarily concerning transparency and operational practices, raises concerns. As a result, we are placing Tether on our Yellow Risk List and recommend that users exercise caution when relying heavily on Tether for significant financial transactions.