Why Tether’s Reserves Probably Don’t Contain Bitcoin

Key Takeaways

  • Tether’s banking partner, Deltec, has announced a BTC investment, provoking speculation about Tether’s reserves.
  • Tether’s General Counsel, Stuart Hoegner, says that Deltec’s activities are separate from Tether’s own reserves.
  • USDT is backed by U.S. dollars and other assets, not Bitcoin.

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Tether has strongly implied that its USDT stablecoin is not backed by Bitcoin, following unclear statements from its banking partner Deltec.

Deltec Invests In Bitcoin

Hugo Rogers, Chief Investment Officer of Deltec Bank, recently announced that his firm invests some customer funds in Bitcoin. Because Tether is one customer of Deltec, some news reports provoked concerns that Tether’s reserves may contain Bitcoin.

However, Deltec’s investments and Tether’s reserves are clearly independent of one another. Coindesk, one of the first sites to report the news, states that a Tether representative “denied that any of those funds [invested in Bitcoin] were Tether’s.”

Furthermore, Stuart Hoegner, general counsel for Tether, released a public statement on Twitter affirming that the two funds are not connected to one another in any way.

Samson Mow, CTO of Blockstream, also commented on the news. Mow explained that “Deltec offers investment management services and [manages] portfolios of their customers.” He added that Deltec is not “taking customer funds arbitrarily to buy Bitcoin.”

USDT Not Backed by Bitcoin

According to Tether’s website, the USDT stablecoin is 100% backed by a reserve of U.S. dollars and other assets, including “traditional currency and cash equivalents and, from time to time…other assets and…

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