Tether just updated its website to clarify that each of its USDT tokens, which it used to claim were “always backed 1-to-1 with traditional currency,” are backed by assets other than fiat currency.
Now, the website instead reassures its patrons that it’s always “100% backed by [its] reserves.” It clarifies this vague language, even legalistic language, by saying these reserves “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.”
Despite the fact that some of Tether’s collateral might not actually be in fiat, the revised notice concludes by saying, “Every Tether is also 1-to-1 pegged to the USD, so 1 USD₮ is always valued by Tether at 1 USD.” The older version read, “1 USD₮ is always equivalent to 1 USD.”
Tether’s statement that it values each of its tokens at $1 is not the same as saying that each token is backed by $1; rather, each token’s dollar value is instead derived from Tether’s valuation of its assets. This clarification will likely embolden Tether’s more staunch opponents, who have argued that Tether is insolvent. While there’s never been any evidence to suggest that Tether does not have the reserves to back the coins in circulation, the company has routinely refused to submit to a formal audit, opting instead for attestations from a law firm in the past.
This update seems to at least lend credence to these insolvency concerns, which have been most thoroughly vetted by researchers at the University of Texas at Austin who released a report with a thesis that hinges on the belief that Tether’s issuance inflated the market during the 2017 bull run.