The phantom dollar

One of the most significant cryptocurrency companies is Tether (USDT). The hundreds of billions of dollars market capitalisation of USDT makes it more akin to a phantom US dollar, embedded in crypto markets than a speculative asset. Tether provides stability, liquidity and efficient capital flows to traders, exchanges, DeFi protocols and liquidity providers. But due to USDT’s systemic impact and increased regulatory attention, a disruption might have far-reaching ramifications. Tether’s function as crypto trading’s backbone, faces regulatory challenges (such as the US’s GENIUS Act), but what could happen if something goes wrong?

Tether, founded in 2014 as RealCoin, aimed to give cryptocurrency consumers a reliable asset tied to the US dollar. Traditional cryptocurrencies are volatile - thus a stable digital asset has long been in demand. USDT claims to have US dollar reserves, hence each token may be redeemed for $1 in currency. USDT pervades as it works on a variety of blockchains suc…