TETHER, the largest stablecoin in the world, is faced with meticulous examination and potential instability, according to a crypto analyst. The concerns arise from recent regulatory challenges and typing models that suggest underlying liquidity problems. Tether recently hit $ 2 billion in new USDT tokens on the Tron Blockchain, describing them as “authorization but not issued”. This practice, according to Chain Mind, a cryptographic researcher, often signals the preparation of market stress, allowing Tether to have tokens ready for potential buyout waves without immediately freeing them into traffic. However, criticism argues that this approach could turn against periods with high demand, potentially revealing underlying liquidity problems.
The moment of these large mints has historically coincided with periods of market volatility, which raises other concerns concerning the stability of Tether. The European Union market regulations in cryptocurrencies now require that stablecoins maintain 60% of reserves in EU banks. Tether refused to comply with these new requirements, leading major exchanges like Binance and Kraken to bring the USDT back to European markets. Instead, Tether supported a new stablecoin in accordance with the Euro called Stablr as a potential bypass. This regulatory decline represents the most important challenge to the world domination of Tether since its creation, affecting millions of European cryptography merchants who have relied on the USDT for commercial pairs. Market analysts suggest that this could considerably reduce the liquidity and volume of negotiation of Tether.
TETHER maintains that it contains $ 115 billion in US treasury bills plus $ 5.6 billion in surplus reserves, according to their T1 2025 report. However, the company has never finished a complete independent audit, based rather on “orders”. The Prosecutor General of New York previously noted that complaints of support 1: 1 USD of Tether were false, which led to a regulation of $ 18.5 million in 2021. Critics indicate the past cases where Tether would have temporarily moved the funds before reporting the periods. The company was also examined for secretly covering a loss of $ 850 million thanks to its relationship with Bitfinex Exchange. These historical problems fuel current skepticism on the transparency of reserves.
The USDT currently represents 62% of the entire Stablescoin market and facilitates most of the cryptocurrency exchanges worldwide. A collapse would probably trigger cascade effects on DEFI platforms like Aave and Curve, which use the USDT as a central guarantee. Even a brief Depeg of 1% in 2022 caused problems of importance and liquidity of trade. The interconnected nature of cryptographic markets means that Tether’s failure could simultaneously freeze trade on several platforms. Alternative stables like the USDC and the DAI exist but lack generalized adoption of the USDT, in particular on the Asian and emerging markets where the attachment dominates the volume of trading.
