Tether's Bank Deltec Says Stablecoin Is Fully Backed by Reserves

"Every tether is backed by a reserve and their reserve is more than what is in circulation," said Gregory Pepin, Deltec Bank's deputy CEO.

AccessTimeIconJan 22, 2021 at 2:15 p.m. UTC
Updated May 9, 2023 at 3:15 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Tether Ltd.'s Bahamas-based bank, Deltec, said on Friday the company's tether (USDT) stablecoin is fully backed by reserves, downplaying resurgent fears about the cryptocurrency's integrity.

"Every tether is backed by a reserve and their reserve is more than what is in circulation," Gregory Pepin, Deltec Bank deputy CEO, said on the latest episode of the "Unchained" podcast hosted by journalist Laura Shin. "We can see it firsthand, so I can confirm that."

  • El Salvador Targets Bitcoin Millionaires in New Push to Attract Long-Term Residents
    01:03
    El Salvador Targets Bitcoin Millionaires in New Push to Attract Long-Term Residents
  • OpenAI's Ex-CEO Sam Altman Joins Microsoft; Bullish Completes Purchase of CoinDesk: WSJ
    02:02
    OpenAI's Ex-CEO Sam Altman Joins Microsoft; Bullish Completes Purchase of CoinDesk: WSJ
  • BitGo CEO Says More Bitcoin ETF Rejections Are 'Quite Likely'; Tether's Bitcoin Mining Plans
    02:09
    BitGo CEO Says More Bitcoin ETF Rejections Are 'Quite Likely'; Tether's Bitcoin Mining Plans
  • Key Driver Behind Bitcoin's Price Spike; California's Crypto Licensing Bill Signed Into Law
    02:09
    Key Driver Behind Bitcoin's Price Spike; California's Crypto Licensing Bill Signed Into Law
  • Tether Ltd., the company behind the tether stablecoin (which has a value linked to the U.S. dollar on a 1:1 basis), has been long accused of lacking of transparency about the coin's backing. Indeed, a Tether lawyer said in 2019 each USDT was only about 74% backed by fiat equivalents.

    USDT's market capitalization has grown from $4 billion to an astonishing $24 billion in the past 12 months. Reserves are said by Tether on its website to include "traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities."

    Fears about a shortage of backing resurfaced last week after a Medium post cited the discrepancy between the amount of tether issued during the nine months to September 2020 and the funds held at Bahamas-based domestic banks as evidence of a massive shortage of reserves at Tether.

    "There weren’t nearly enough dollars in all the domestic banks in the Bahamas to back the tethers that were floating around in the crypto market," the anonymously penned post stated, citing Bahamas central bank figures.

    Pepin, however, refuted that claim, stating that Deltec is not a domestic bank and doesn't have an authorized dealer license, which is needed to hold Bahamian dollars in cash and deposits.

    "We cannot take domestic customers and we cannot hold domestic Bahamian dollars. So that report is actually not relevant," Pepin told Shin. "And actually, if [the post's author] took a little effort to go and dig a bit about the size of the Bahamian market of banking, [that person] would have found out that the entire mass of banks have around $200 billion in assets, I believe. And we are a part of that."

    Pepin also offered clarity on the bank's recent disclosure of bitcoin (BTC) purchases for clients, which triggered rumors it was doing so on behalf of Tether. Both the bank and Tether denied the claim last week.

    "We have a very competent and well-respected investment team. And as part of their portfolio education for customers, they actually did an allocation in bitcoin on behalf of those customers," Pepin said, noting that the 50-year-old bank's customers range from asset managers to high-net-worth individuals.

    Watch the full video:

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.