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Stablecoin Issuer Tether Hits Back Deutsche Bank’s Argument Over its Solvency

In its latest statement, Tether, the leading stablecoin globally, has strongly rebuked Deutsche Bank’s remarks questioning the sustainability of stablecoins and Tether’s financial stability.

Deutsche Bank’s recent research, released on Tuesday, delved into the history of 334 currency pegs dating back to 1800, revealing that only 14% endured over time. Drawing parallels to stablecoins, the bank’s analysts expressed concerns about the asset class’s susceptibility to “turbulence and de-pegging events.”

The bank’s report highlighted the potential for instability within stablecoins, citing their operational opacity and susceptibility to speculative pressures as significant risk factors. While acknowledging the possibility of some stablecoins surviving, the report emphasized that many are likely to falter.

The research also examined the collapse of TerraUSD, a stablecoin incident that reverberated throughout the cryptocurrency market. Deutsche Bank’s analysis underscored the inherent volatility and risks associated with stablecoins, advocating for enhanced transparency and regulatory oversight in the crypto sector.

Furthermore, Deutsche Bank directed criticism towards Tether, a prominent stablecoin, raising doubts about its financial stability and its industry standards regarding crypto derivatives.

The bank warned of the potential for a “Tether peso moment,” which could lead to substantial losses, particularly affecting leveraged traders and causing widespread repercussions across the cryptocurrency ecosystem.

Moreover, the report highlighted the complexities involved in establishing stable currency pegs, despite the innovative nature of cryptocurrencies. It emphasized the likelihood of increased instability in the future.

In a separate survey conducted by the German banking giant in March, which included over 3,350 consumers (with 550 respondents from France, Germany, Spain, Italy, and the UK each, and 600 from the USA), concerns about the stability of stablecoins were evident.

The survey revealed that only 18% of consumers anticipate stablecoins thriving, while 42% anticipate their decline.

Tether Slams Deutsche Bank’s Stablecoin Warning

The research team notably expressed concern regarding Tether, citing its significant influence as a dominant player in the stablecoin market. Additionally, according to a report from Bloomberg, analysts highlighted Tether’s integral role in the crypto derivatives market.

They pointed out that the reliance on Tether in this market contributes to a 30% de-peg rate among certain stablecoins, with many failed stablecoins posing challenges for accurate assessment.

In response to Deutsche Bank’s assertions about stablecoins, Tether countered that the research lacks clarity and substantial evidence, relying instead on vague assertions rather than rigorous analysis.

Tether argued that while the research attempts to predict the decline of stablecoins, it falls short in providing concrete data to substantiate its claims.

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