David Schwartz, CTO of Ripple and co-creator of XRP, has weighed in on growing concerns about Tether’s influence on Bitcoin and other financial markets. These concerns revolve around accusations that Tether, through its USDT stablecoin, is artificially inflating the value of the cryptocurrency and propping up the US bond market.
David Schwartz, CTO of Ripple and co-creator of XRP, has weighed in on growing concerns about Tether’s influence on Bitcoin and other financial markets. These concerns revolve around accusations that Tether, through its USDT stablecoin, is artificially inflating the value of the cryptocurrency and propping up the US bond market.
Gamza KhanzadaevThe debate has been sparked by claims that Tether’s operations involve a revolving door between Tether, Bitcoin and the US bond market. Critics argue that by creating artificial liquidity, Tether is propping up the largest financial bubble in history. They highlight the intertwined nature of Tether and Bitcoin, suggesting that if the bonds fail, BTC could do the same due to this perplexing system.
Tether’s latest data shows that all of its tokens are pegged 1-to-1 to a corresponding fiat currency and are fully backed by Tether reserves. These reserves consist primarily of cash equivalents, U.S. Treasury bills, precious metals, Bitcoin, and other investments.
However, the composition of these reserves has attracted attention, particularly the dependence on “T-Bills”, which represent almost 80% of cash equivalents.
Alex DovbnyaIn response to these concerns, Schwartz emphasized the basic principles of how financial systems work. He explained that the creation of new assets, whether Bitcoin, USDT, or traditional bank deposits, inherently adds value to the existing asset pool without destroying existing value.
Schwartz’s perspective aims to demystify the process, emphasizing that newly created assets contribute to the total value of the system, without detracting from pre-existing assets.
