6 months ago
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Tether, the largest stablecoin in the world, has slammed a recent Deutsche Bank report that questioned the stability of stablecoins and Tether’s solvency.
The research, published on May 7, analyzed 334 currency pegs from the year 1800 onward and revealed that only 14% of the total had survived. The Bank’s analysts then applied their analysis to stablecoins, noting their concerns regarding the asset class, which they believe is prone to “turbulence and de-pegging events.”
“While some may survive, most will likely fail, particularly due to the lack of transparency in stablecoin operations and vulnerability to speculative sentiment,” the report noted.
The study specifically analyzed the collapse of the TerraUSD stablecoin in May 2022, an event that wiped out almost $45 billion from the global crypto market within a week. It pointed out the inherent risks and volatility associated with stablecoins and stressed the significance of greater transparency and regulatory oversight over them.
Deutsche Bank also expressed concern about Tether specifically, questioning its solvency and influence in the crypto derivatives market. A ‘Tether peso moment,’ the report said, could lead to major losses, severely affecting leveraged traders and impacting the broader crypto ecosystem.
Furthermore, the Bank’s survey of over 3,350 consumers in March across six countries found that only 18% believe stablecoins will thrive, while 42% expect them to decline. The survey was conducted in France, Germany, Spain, Italy, the UK, and the United States.
Deutsche Bank’s research team also raised concerns about Tether’s dominance, given its perceived monopoly within the stablecoin market and its influence in the derivatives sector.
“The 30% de-peg rate among some stablecoins is therefore hardly surprising, and many defunct stablecoins are hard to account for,” the analysts noted.
Tether dismissed the report, criticizing it for lacking “clarity and substantial evidence,” and relying on “vague assertions rather than rigorous analysis.”
The stablecoin provider asserted that the research didn’t provide concrete data to back its predictions of stablecoin decline.
