If there is one particular token in the cryptocurrency world which sparks the most debate, it has to be Tether’s USDT. Although this is supposed to be a digital representation of the US dollar, there have been numerous concerns over its rapidly increasing supply and the financial assets required to back it. As of right now, the Tether supply is over 2 billion USDT. It’s a remarkable milestone, albeit one that is heavily criticized.
Two Billion Tethers are in Circulation
It is evident the creation of Tether’s USDT tokens has always been considered rather controversial. Every USDT in circulation represents one US dollar. One would expect the Federal Reserve to oversee the issuance of such pegged tokens, rather than a company known as Tether. So far, there has been no negative backlash, although it may only be a matter of time until the US government decides to pay closer attention to this particular project. It doesn’t seem as if Tether violates any regulations, though.
What has most enthusiasts concerned, however, is that the USDT supply is increasing very rapidly. A few weeks ago, daily “prints” of 10 million USDT were not all that uncommon. It seems Tether has ramped up production quite significantly, as it issued an additional 400 million USDT this week alone. That is a very steep amount of currency being brought into circulation. As long as the company has the financial assets to back these tokens, there is no cause for concern. So far, we don’t know if that is the case, which fuels even more speculation.
Thanks to its increasing rate of issuing new USDT, Tether has reached a major milestone. With over 2 billion USDT in circulation at the time of writing, there seems to be an endless supply of these tokens. The company also recently announced that its USDT tokens now exist on the Ethereum blockchain as well, which may explain the sudden increase in demand. Whether or not this is a driving factor has yet to be determined at this point.
One thing a lot of cryptocurrency users have pointed out in recent months is that new USDT tokens are always printed at “convenient” times. When the Bitcoin price faces major adversity, Tether brings more currency into circulation than it would otherwise. When the Bitcoin price rises, it will issue USDT in order to keep the trend going. This all sounds like a major conspiracy, as no wrongdoing has been proven to date. However, there seems to be no such thing as coincidence in the cryptocurrency world these days. People are suspicious by nature, and it’s only normal they would voice such concerns publicly these days.
Whether or not Tether’s recent “milestone” is a good thing remains to be seen. Given the negative focus on this company prior to this event, it is very likely it will receive even more negative press because of this development. At the same time, if the company simply is succeeding by legitimate means, there is absolutely no cause for concern. Given that there is no arbitrage opportunity with Tether, or any chance of it appreciating in value, it remains to be seen where this demand for USDT is coming from. One USDT will always be valued at approximately US$1, although there has been a 7% discrepancy in the past. Only time will tell whether or not this is all on the up-and-up, but for now, no one can fault Tether through anything other than circumstantial evidence.