Tether (USDT) and Binance (TUSD) are two of the most popular and widely used stablecoins in the cryptocurrency market. Stablecoins are digital assets that are designed to maintain a stable value relative to a fiat currency, such as the US dollar. They are often used as a medium of exchange, a store of value and a hedge against volatility in the crypto space.
However, some stablecoins have been criticized for their lack of transparency, accountability, and regulatory compliance. In particular, Tether and Binance have faced allegations of manipulating the market, inflating their supply, and not having sufficient reserves to back up their tokens. The continuous printing of USDT and TUSD by Tether and Binance has its pros and cons with outlining potential implications for the crypto industry and investors.
The year 2023 is expected to be a crucial one for the stablecoin market. As the demand for crypto assets grows, so does the need for reliable and transparent pegged tokens. USDT, issued by Tether, is the oldest and largest stablecoin by market cap. In May 2022, Tether stopped printing new USDT tokens, amid rumors of a possible ban by the US government. Since then, USDT’s market cap has remained stagnant at around $62 billion.
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TUSD, issued by TrustToken with Binance having share in its running just like Coinbase is to USDC, TUSD is a newer and smaller stablecoin that claims to offer full collateralization and regular audits. It is also compliant with various regulatory standards and has partnered with several reputable institutions. TUSD has seen a steady growth in its market cap since its launch in 2018, reaching $3.1 billion by December 2022. However, TUSD also faced some challenges in 2022, such as a temporary de-pegging in March and a hack in October that resulted in the loss of $31 million worth of tokens.
One of the main advantages of printing USDT and TUSD is that it increases the liquidity and accessibility of the crypto market. By providing more stablecoins, Tether and Binance enable more users to enter and exit the market easily, without having to deal with fiat conversions, fees, or delays. This can also facilitate cross-border transactions, arbitrage opportunities, and decentralized finance (DeFi) applications.
Another benefit of printing USDT and TUSD is that it supports the demand and adoption of cryptocurrencies. As more people use stablecoins as a gateway to crypto, they may also explore other digital assets and platforms. This can increase the network effects, innovation, and diversity of the crypto ecosystem.
The main drawbacks of printing USDT and TUSD is that it poses systemic risks and challenges to the crypto market. By creating more stablecoins than they can back up with real assets, Tether and Binance expose themselves and their users to potential legal actions, regulatory scrutiny, or market shocks. If either of them fails to redeem their tokens or loses their peg to the dollar, it could trigger a massive sell-off, panic, or loss of confidence in the crypto space.
Another disadvantage of printing USDT and TUSD is that it undermines the credibility and integrity of the crypto industry. By operating in a secretive and unregulated manner, Tether and Binance raise doubts about their motives, methods, and accountability. They also create an unfair advantage over other stablecoin issuers who follow stricter standards and practices. This can erode the trust, reputation, and value of the crypto sector.
The future of Tether and Binance printing USDT and TUSD depends largely on how they respond to the growing concerns and pressures from regulators, auditors, competitors, and users. If they can prove that they have adequate reserves, comply with relevant laws, and improve their transparency and governance, they may be able to maintain their dominance and influence in the crypto market. However, if they fail to do so, they may face legal actions, sanctions, or bans that could jeopardize their operations and impact their users.
For investors who use USDT or TUSD as part of their portfolio or strategy, it is important to be aware of the risks and rewards involved. While these stablecoins may offer convenience, stability, and liquidity in the short term, they may also expose investors to uncertainty, volatility, and losses in the long term. Therefore, investors should do their own research, diversify their holdings, and exercise caution when dealing with these stablecoins.