In Light of Tether’s Fractional Reserve, a Shadow of Fiatcoins’ Future42

Tether has taken a lot of heat for admitting it is running a fractional reserve. There’s no doubt that Tether’s unregulated nature makes this approach risky and that its lack of transparency is unsettling, but the entire modern banking system is architected on fractioned assets.

And Tether is not the only stablecoin that admits that it is backing its tokens with cash and “equivalent assets”; all of its competitors state in their terms of use that they can (and/or do) back tokens with cash-like investments, like government treasury bonds or other securities.

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