Tether, the world’s largest stablecoin, has responded strongly to Deutsche Bank’s recent statement questioning the sustainability of stablecoins and Tether’s solvency. Deutsche Bank’s research, which studied 334 currency pegs since 1800, concluded that only 14% of them survived. The analysts at the bank noted that stablecoins are prone to turbulence and de-pegging events, with most likely to fail due to lack of transparency and vulnerability to speculative sentiment.
The collapse of TerraUSD stablecoin was analyzed in the report, causing ripple effects on the entire crypto market. Deutsche Bank highlighted the risks and volatility associated with stablecoins, emphasizing the need for greater transparency and regulation in the cryptocurrency market. The bank also singled out Tether, questioning its solvency and industry standards for crypto derivatives, warning of potential significant losses and negative impacts on the crypto system in case of a ‘Tether peso moment’.
Deutsche Bank’s report emphasized the challenges in creating stable currency pegs despite the innovation of cryptocurrencies, predicting more instability in the future. A survey of over 3,350 consumers in March showed mixed opinions on stablecoins, with only 18% expecting them to thrive while 42% expect them to fade. The research team expressed concerns about Tether, given its dominant position in the stablecoin market, and its reliance in the crypto derivatives market.
In response to Deutsche Bank’s claims, Tether criticized the research for lacking clarity and substantial evidence, relying on vague assertions rather than rigorous analysis. Tether disputed the forecast of stablecoin decline, stating that the report failed to provide concrete data to support its claims. The dispute between Tether and Deutsche Bank reflects larger debates within the cryptocurrency market about the sustainability and regulation of stablecoins, highlighting the need for further research and analysis in this rapidly evolving sector.
