According to analysts of the WSJ news portal, Tether, the well-known asset, may soon have big troubles. They beleive that the asset balance is in an extremely unsatisfactory state, and if the value of reserve assets decreases by at least 0.3%, then Tether may become a technically insolvent currency in the near future.
Analysts of the WSJ portal provided a corresponding report, in which they studied the cloud nature of existing reserves and the way the company has been carrying out the audit procedure for the last several years. Thus, analysts suggest that if Tether’s liabilities suddenly surpass its assets, then the existing reserves will be extremely insufficient to ensure the financial stability of the company and Tether will lose its solvency.
What does a decrease in assets by a fraction of a percent lead to?
According to analysts, if there is a minimum asset decrease, the market situation may be even more dramatic than at the moment. The fall of stablecoin s and other tokens is inevitable now. Investment funds will have even less confidence in the stablecoin class as such, and they will try to leave them for safer assets.
It is now known that Tether has assets worth a total of $67.74 billion, and liabilities amounting to $67.54 billion. That is, the difference between them is extremely small. Therefore, the WSJ analyst suggests that if the company’s liabilities exceed its reserves, then it will become truly insolvent.
How does Tether response to that
The company itself believes that the opinions of analysts do not correspond to the present state of affairs. According to the company’s management, reserves will grow soon, and to a significant extent, and there are no risks for Tether in the foreseeable future.
In addition, the company assures that there are no issues associated with repurchasing users` assets. Over seven billion dollars have already been redeemed in just one day, when the situation in the cryptocurrency market began to deteriorate sharply.
According to current data, more than 79% of reserves are provided by cash, as well as commercial securities. The other part is secured by precious metals, tokens, loans and other assets. Actually, the regulators have long doubted what the company`s reserves are really provided with.
Some corresponding investigations were even conducted on this matter. The company had to reimburse fines, after orders to begin to carry out the procedure of constant inspections of its assets and providing information in public reports.
Tether management points out that very soon reports will be submitted every month, not once a quarter, to show and prove to everyone that Tether fully complies with all regulatory requirements in terms of transparency of financial statements. Also, the company has already signed an agreement with BDO accounting organization, it should help to compile monthly reports.
Should we expect Tether collapse or not
A lot will depend on how the situation in the cryptocurrency market as a whole develops. If the recession continues to deepen and investment funds continue to exit the crypto market, then the company may face serious problems. However, the management is confident about that Tether’s financial position is quite stable, and no insolvency threatens it, contrary to the opinion of WSJ analysts.
