Hedge fund interest in Tether has triggered a call for transparency. Some hedge fund firms are selling short Tether, his third-most-traded token in the world, according to reports. Market analysts argue that regulators need to step up scrutiny of Tether amid new turmoil hitting the crypto industry.
Tether (USDT) is a stablecoin. That is, it is fixed to the currency (USD in this case). The stablecoin name emphasizes the idea that it is less volatile with pegs than cryptocurrencies such as Bitcoin and Ether, whose values can fluctuate wildly.
Once a stablecoin is established, there will be a reserve of assets that will be held as collateral.
After weeks of crypto turmoil, another problem looms. Some hedge funds are reportedly shorting his $66 billion stablecoin, Tether.
If so, it suggests that they hope to profit from betting on token issues. It shows that they believe they can be less than a one-for-one exchange.
Nigel Green of deVere Group made an analysis that this scenario would be very damaging to the broader digital asset ecosystem.
How Tether is backed remains a mystery. No undisclosed audits. But with a one-to-one pledge with the dollar, we need at least $66 billion in reserves to support the coin.
“With all the recent drama in the cryptocurrency market, we urgently need more transparency,” said Nigel Green, stressing that “the speculation that drives fear, uncertainty and suspicion will ultimately To end it, we are asking Tether to clarify the extent of their holdings.”
He also called for increased regulatory oversight for tokens and the wider industry.
“The U.S. Commodity Futures Trading Commission (CFTC) said in a recent court filing against FTX founder Sam Bankman-Fried that digital assets like Tether are commodities. has the authority to enhance token oversight.”
What is needed is a strong regulatory framework that is established and endorsed at the international level.
Such regulation would not only help protect investors, tackle cryptocurrency crime and reduce its potential to disrupt global financial stability, but would also provide potential long-term Provides an economic boost.
Nearly all forex trading takes place through banks or currency companies, and this is what needs to happen with cryptocurrencies. It makes it much easier to tackle fraud and make sure your taxes are paid.
As recent events have highlighted, there is an urgent need for greater transparency and regulation in the industry if the crypto ecosystem is to thrive and realize its enormous potential.
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