Mike Novogratz, the founder of Galaxy Digital Holdings and an avid supporter of cryptocurrencies, has said that Tether has nobody but itself to blame for the recent issues they have been facing.
Novogratz Addresses Recent Tether FUD
Bitcoin bull Mike Novogratz believes that Tether (USDT) needs to be more transparent. He was speaking recently at a conference in Frankfurt, and his observations were published in an article on Bloomberg.
The billionaire investor, founder of Galaxy Digital Holdings, and former partner at Goldman Sachs said, “I think Tether didn’t do a great job in terms of creating transparency.” He added that the digital asset will need time to regain the lost trust.
Tether, a U.S. dollar-backed stablecoin, experienced panic selling earlier Monday based on rumors that many leading exchanges were going to delist the coin. Traders and investors dumped their USDT holdings in favor of Bitcoin and other stable currencies like the Circle-backed USD Coin (USDC) and Gemini USD (GUSD). This led to a 7% drop – from USDT’s Sunday high of $0.995 to a low of $0.925 on Monday.
“The concept of stablecoins make sense,” Novogratz said, adding that stablecoins have more of a transactional character than other cryptocurrencies like Bitcoin. He further mentioned that he would prefer a stable coin like GUSD as it is backed by a U.S.-based bank like State Street to maintain its backup reserves.
Tether earlier had a banking relationship with Noble, a Puerto Rico-based bank, which recently ran out of cash and is likely to be put up for sale. As reported by Live Bitcoin News, Tether is known to have withdrawn its cash reserves from Noble and switched over to Bahamas-based Deltec Bank.
Seeking to clarify some of the statements made in the Bloomberg article, Novogratz later tweeted:
Id like to put context to these quotes as the last thing I want to do is spread FUD. I said I thought tether has a dollar for every tether and that we actively traded it. The fact that almost $700mm has been redeemed in an orderly fashion is important. https://t.co/SrMa6uPpr6
— Michael Novogratz (@novogratz) October 19, 2018
Also Talks About Roubini’s Senate Remarks
Responding to the recent attack on cryptos by economist Nouriel Roubini during a Senate hearing, Novogratz said that the rise in custodian firms will help give the asset class a boost. He added that these firms have the potential to replace credit card companies. Roubini had called digital money, “the mother of all scams and (now busted) bubbles.”
“You can agree with Roubini on several points, but he is judging cryptocurrencies as if it was a PhD student. Cryptocurrencies are third- or fourth-graders, so still in need to mature,” Novogratz said.
Observing that the bubble last year was the result of speculation by retail investors, he argued that the investments into cryptocurrency infrastructure and custodian services will help the industry mature.
Novogratz, along with Goldman Sachs, earlier this week announced the investment of over $15 million in BitGo’s custody services arm. He also referred to Fidelity setting up a subsidiary for custody of digital assets.
He believes that custodians may also take over a significant part of the business currently done by credit card companies like Mastercard or Visa. “The transaction costs are much cheaper,” he said, adding “The least the proliferation of custodians will do is drive fees much lower.”
With growing competition from USDC and GUSD, which are more open in their operations, Tether needs to bring transparency in its working if it must maintain its current lead in the stablecoin space.
Do you agree with Novogratz that lack of transparency is hurting Tether? Let us know in the comments below.
Images courtesy of Twitter/@novogratz and Shutterstock.