Tether came under increasing pressure on Thursday, pushing the price of one of the most important assets in global crypto markets well below its $1 mark.
The $80 billion stablecoin, which is expected to track $1 in value, fell to 95.11 cents early Thursday in European trading, according to a CryptoCompare index that tracks trading across the world’s top digital asset exchanges.
Stablecoins claim to offer crypto traders a safe place to park their funds between bets on volatile cryptocurrencies. By far the largest stablecoin in the world, Tether plays a crucial role in facilitating trading in the crypto market and also provides a connection to the traditional financial system.
Tether’s price drop to more than 3 percent below its $1 peg rebounded on the digital asset market. Bitcoin, the most actively traded cryptocurrency, fell nearly 7 percent to $26,250, its lowest level since December 2020.
Tether’s demise comes after TerraUSD, a much smaller stablecoin, completely broke its peg to the dollar. Tether, unlike TerraUSD, claims to be backed by a basket of dollar-based assets. However, his supporters have declined to provide details of his holdings.
The group was fined $41 million by the US Commodity Futures Trading Commission last year for allegations that it made misleading claims from at least June 2016 to February 2019 that it had sufficient dollar reserves to cover each of its to cover stablecoins in circulation.
Regulators have cited stablecoins, which are largely unregulated in most markets, as a risk to financial stability. The Federal Reserve said earlier this week that just three stablecoins, Tether, USDCoin and Binance USD, make up 80 percent of the $180 billion market.
Source: Crypto News Austria