Unlike decentralized stablecoins, Tether’s real risk is off-chain, hence all speculation of Tether market crash is really just outrightly comical.
Think about it for a second, Tether’s USDT market cap isn't some made up numbers, by technicality, it's reflective of off-chain deposits, so there's essentially some sort of insurance in place and that's where the real risk lies.
This means that if I hold 1 USDT, I essentially have 1 USD in some off-chain bank or in some treasury investment. If I suddenly woke up and Binance delisted USDT, I should not technically lose money, even if the price crashes, the peg holds true to 1:1 for redemption.
This isn't the case for most decentralized stablecoins, unfortunately because their values are pegged to USD but not insured in it.
If HBD, for instance, crashes, I can only hope it rides back up for an exit. There's no redemption because I essentially acquired debt with no assured commitment, essentially just trading a virtual value.
Surely the USD at hand would appear the exact same thing for deep thinkers but this is a currency that has earned global trust over the years and is still widely accepted, hence a physical hold of it is the most efficient form of backing a stablecoin market that is pegged to it.
This is because beyond market pricing, there's a sentimental value, or what's the more appropriate phrase; faith, in the system.
Is This A USDT Bull Post?
Oh no. Maybe more of a reflective analysis of how USDT is something you shouldn't fear a clash over delisting news or any other forms of on-chain or market weaknesses.
The real risk with USDT is if the supposed reserve is not there or short of the issued amount.
Otherwise, the only people at risk of losing money are everybody except USDT holders.
For those who don't know, this post is a result of recent speculations of USDT crashing over being delisted from Coinbase and potentially other top exchanges like Binance over some MiCA bullshit.
MiCA is short for Markets in Crypto-Assets, and it's some EU bullshit attempt at regulation as that's the only thing they know how to do - force regulations on everyone around the world whilst building nothing themselves.
Judging by a couple honest reports out of the dozens flying around, there seems to be no clear message for if USDT is MiCA-complaint but the likes of USDC are and that's been recommended by exchanges like Binance to users.
It is quite convenient that this is all happening just a couple of days or say less a month after Ripple’s stablecoin, RLUSD hits the market and is fully compliant, judging by reports.
Forced transition for EU users? I'll just keep that conspiracy to myself for now.
Anyone watching can sniff out the fact that USDT’s growing dominance might be worrisome, especially for the banking sector, in a sense. Every advancement or call it innovation in currency trading and essentially money custodianship is simply bad news for banks.
Technological advancements are essentially stealing away their revenue and giving it to private and small companies in terms of employee counts.
It's a control and revenue chase at the end of the day, regulation is never about consumer security as it is always phrased. I mean, if people are dumb enough to entrust $138 billion in the hands of a company with less than 200 staff, maybe they have made their risk assessment and deserve whatever outcome.
Regulations are needed in a lot of industries, but when it comes to money regulation, it's not consumer protection, it's protection of the central bank's control over people's finances and revenue.