The trouble-stricken stable coin USDT has announced a new banking relationship with the Bahamas-based Deltec bank.
Tether’s New Banking Partner
Tether Limited, the firm behind the stable coin with the same name, earlier on Thursday confirmed about its new banking relationship. The announcement was made through a blog post published on the company’s official website.
According to the post:
Tether Limited is pleased to confirm that it has established a banking relationship with Deltec Bank & Trust Limited (“Deltec”), a 72-year-old financial institution with headquarters in the Commonwealth of The Bahamas.
Deltec is an independent financial services group headquartered in the Bahamas that offers a range of banking and financial services to its customers.
In the recent past, Tether (USDT) has been in the news for all the wrong reasons. The firm’s lack of transparency in its operations has caused critics to question its integrity. Doubts have also been cast about whether the firm has enough cash reserves to back its stable coin.
Firm’s Recent Troubles
The firm which also shares its management with the cryptocurrency exchange Bitfinex ran into fresh controversy when its Puerto Rico based banking partner Noble declared that it had run out of cash and had to be put up for sale.
Bitfinex suspended cash deposits followed by FUD (Fear Uncertainty Doubt) of USDT being delisted by several exchanges. The rumours caused panic among investors leading to a sell-off. The price of Tether plunged to $0.95 and 500 Million USDT tokens had to be withdrawn from the market and destroyed to maintain its price.
Growing competition from regulated stable coins like Circle’s USD Coin (USDC) and Gemini’s GUSD are also eating into Tether’s market share.
Restoring Investor Confidence
It is apparent from the details shared in the post that Tether is trying to restore its lost credibility.
The announcement talking about the Deltec’s evaluation process said:
The acceptance of Tether Limited as a client of Deltec came after their due diligence review of our company. This included, notably, an analysis of our compliance processes, policies, and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.
It further added:
This process of due diligence, was conducted over a period of several months and garnered positive results, which led to the opening of our bank account with this institution. Deltec reviews our company on an ongoing basis.
Mike Novogratz had recently remarked that Tether’s lack of transparency has hurt it and it will take time to regain trust.
Getting a new banking partner in place was the first thing that Tether needed to fix. The firm needs to do more to restore the trust of investors if it is to maintain its number one position in the stable coin market.
What more do you think Tether needs to do to regain the trust of investors? Let us know in the comments below.
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