Stablecoin Tether (USDT) has taken another blow this after Digifinex, a top twenty exchange, announced its decision to delist the coin.
Digifinex co-founder Kiana Shek explained in a CoinDesk interview that the decision was taken to replace USDT with TrustToken’s TrueUSD as there were trust issues with Tether and that the outfit had been “looking for ways to get rid of USDT” for sometime.
— Digifinex Exchange (@digifinex) September 15, 2018
The news coincides with another development from the team at Exodus who appear to have taken an opposite stance, announcing the inclusion of USDT in their wallet via their blog post, emphasising that their approach is one of offering a range of stablecoins within their wallet applications including TrueUSD.
STABLECOINS CONTINUE TO AROUSE DEBATE
The team behind Tether has as yet been unable to provide independently audited accounts confirming its claim that each USDT is backed by the equivalent amount in dollar reserves.
Despite this, USDT is widely used by traders because of its ease of use and is currently ranked in the top ten cryptocurrencies by market capitalisation.
The viability of Tether, and indeed all stablecoins, has recently been called into question by University of Berkeley Professor Barry Eichengreen who, when discussing the subject of cryptocurrency-fiat pegging mechanisms, stated “it is not obvious that the model will scale, or that governments will let it.”
Professor’s Eichengreen’s comments have met with a mixed response but appear to have opened up a wider debate about stablecoins.
Some observers have pointed out that, should a systemic crisis similar to that of 2008-9 re-occur, new bail-in legislation now operational in many countries would see bank deposits used to restore failing banks back to health before a government bank bail-out could be considered. In such a scenario, this would likely negate any deposit protection given to account holders, including those who hold such accounts to underpin crypto stablecoins.
For other observers, however, the very concept of a stablecoin is contradictory with the original Bitcoin white-paper itself stating that “the history of fiat currencies is full of breaches of that trust,” carrying the implication that cryptocurrencies should serve as an alternative to traditional currencies, and not be linked directly to them.