This news has fallen very badly on the cryptocurrency market when it was read that the US is launching an investigation against the Tether Company, which provides the biggest stable coin, USDT. “Sources” claim that the Department of Justice (DOJ) is looking into Tether’s compliance with financial regulations as well as its historical banking practices and allegations of providing misleading information on its reserves.
Tether has been long the base of the crypto ecosystem, acting as the conveyor between the digital stock market and fiat currencies. It’s very necessary for any trade and liquidity at different places. But never quiet questions about the transparency and sufficiency of Tether’s reserves continued to create concern in the industry.
Along with that, the gloomy report from the research has left the markets nose-diving into Bitcoin, Ethereum, and many more major cryptocurrencies. Because market insiders are scared of what may come after the probe with respect to regulatory action, analysts have expressed concern that increased scrutiny of Tether can have ripple effects across the rest of the crypto market because the stablecoin is very significant for trading volumes as well as a reserve currency for exchanges.
To this end, Tether reaffirmed a statement on its commitment to compliance with regulatory frameworks and transparency by the very company that stated it would be able to maintain a 100% cash-backed stablecoin but remains a trusted partner in the digital continuum.
Hence, this is yet another strengthening factor for the stablecoins putting more and more governments and financial authorities across the world in abuzz to have them under closer observation. So, while this scrutiny lasts, the market in cryptocurrency will be volatile for the foreseeable future, with stakeholders glued to the next moves of Tether.
