On Thursday, Tether came under increasing pressure, pushing the price of one of the most important assets in global cryptocurrencies well below the peg to $ 1.
Stablecoin for $ 80 billion, designed to track the value of $ 1, fell to 95.11 cents at the start of European trading day on Thursday, according to the CryptoCompare index, which tracks trading on the world’s leading digital asset exchanges.
Stablecoins claim to provide crypto traders with a safe place to park their cash in between betting on volatile cryptocurrencies. Tether, by far the world’s largest stablecoin, plays a crucial role in facilitating crypto-market trading and also provides a link to the traditional financial system.
Tether’s price drop of more than 3 percent below the peg to $ 1 has bounced across the digital asset market. Bitcoin, the most actively traded cryptocurrency, fell nearly 7 percent to $ 26,250, the lowest level since December 2020.
The decline in Tether comes after TerraUSD, a much smaller stablecoin, has fully detached from pegging to the dollar. Tether, unlike TerraUSD, claims it is backed by a basket of dollar assets. However, his supporters declined to give details of his holdings.
Last year, the U.S. Commodity Futures Trading Commission fined the group $ 41 million for accusing it of making misleading statements at least from June 2016 to February 2019 about having sufficient dollar reserves to keep each of its stable coins in circulation.
Regulators cited stablecoins, which are largely unregulated in most markets, as a risk to financial stability. The Federal Reserve said earlier this week that only three stablecoins, Tether, USDCoin and Binance USD, make up 80 percent of the $ 180 billion market.