No matter what you believe about USDT—Tether—it is beyond question that the stablecoin has become integral to the digital asset industry. It’s the most-traded digital asset by a significant margin, and the network of exchanges surrounding Tether hold significant amounts of USDT. In fact, the single largest holder of USDT is Binance (over 17 billion USDT), followed by Huobi.
So, if it is true that USDT aren’t close to being backed by reserves (we and many others are saying they aren’t), the billions held by exchanges throughout the ecosystem are not worth an equivalent in USD, they’re worth nothing at all—which means the digital asset markets have an enormous impending liquidity problem.
Unfortunately, as time goes on, we see two things from Tether: more evidence that USDT is unbacked, and an increasing reliance on Tether throughout the industry and beyond it. The month of June has been no exception.