In his interview with Euromoney, Paolo Ardoino, chief technology officer (CTO) of Tether, stated that a company named MHA will provide attestations of its reserves, while Tether will also be working on a complete audit – something other stable currencies also lack.
The audit is not conducted by one of the big four auditors due to concerns about repetitional risk caused by the lack of legislative regulations surrounding stablecoins.
“I think its one of the top 12, so not that bad,. The big four are a bit more cautious about providing a full audit when the rules are not clear,” Ardoino said.
Tether short sellers
Short sellers have so far merely proven that the stablecoin can maintain a one-to-one peg to the dollar. In May, Tether’s value fell below 95 cents on certain cryptocurrency exchanges, when the price of a rival stablecoin known as TerraUSD (USDT) and its sister token LUNA plummeted.
Tether CTO previously stated that Terra creating a token and stablecoin was a “recipe for disaster,” because with LUNA acting as the highest collateral for the UST, the stablecoin was bound to lose its dollar peg once the token crashed.
Ardoino compares the ensuing dollar redemptions to bank runs in the past. He claimed that the withdrawal of $7 billion worth of dollars from Tether in two days was comparable to the percentage of deposits withdrawn from Washington Mutual in ten days before the bank was taken over by regulators.
“We were put under stress that not even banks can succeed and we passed with flying colours.”
Tether’s role in the crypto space
After the collapse of Terra, the question now is whether short sellers will have a better chance of success in the future when betting against Tether, which may have potentially disastrous consequences for the cryptocurrency sector.
“There is no chance that they would succeed with us. We showed that in the worst-case scenario – when there was Terra crumbling, the entire crypto market crumbline and stock market was going down – we got a tonne of requests of withdrawals, and we honoured them within minutes.”
He continued:
“If you market something as a stablecoin, it should be stable, full stop. You cannot have a guy who wakes up in the morning and creates a new cryptocurrency, backed by another cryptocurrency, backed by good will, and call it a stablecoin.”
Ardoino believes that Terra’s failure will hasten the development of a regulated framework for stablecoins and their backing.
