Tether's Widening USDT Stablecoin Discount Triggers Market Concerns Amidst Collaboration with U.S. Authorities

Tether's discounted valuation raises questions as collaboration with U.S. authorities unfolds.

In a recent development, the price of Tether’s USDT stablecoin has seen a notable decrease on prominent exchanges such as Binance and Coinbase, hitting the largest gap since the mid-year mark, as reported by crypto analytics firm Kaiko. This event aligns with Tether’s announcement of significant cooperation with American regulatory bodies.

Supporting this observation, CryptoSlate’s data indicates that USDT is currently exchanging hands at $0.99911. CoinMarketCap’s statistics reveal that this price reduction is present on key centralized crypto exchanges like Coinbase, Kraken, and Binance, but not on Bitfinex, which is under the same corporate umbrella as Tether, iFinex Inc.

The reasons behind these price reductions are yet to be clarified. Tether has historically attributed such price variances to market-making activities on crypto exchanges.

This price dip comes amidst Tether’s considerable growth this year, with its market cap exceeding $90 billion and holding a 70% share of the market among stablecoins tied to the US dollar. Tether has issued over $23 billion in new tokens this year, matching the total market cap of its main competitor, Circle’s USD Coin (USDC). The expansion has been met with mixed reactions; some view it as a sign of Tether’s solid foundation, while others are wary, deeming the growth unsustainable.

Tether’s recent disclosure of its in-depth collaboration with U.S. law enforcement has also sparked debate within the cryptocurrency community. CryptoSlate disclosed that Tether had immobilized 326 wallets, totaling $435 million in USDT, at the behest of U.S. authorities, including the DOJ, FBI, and Secret Service, to aid in the fight against illegal stablecoin activities. Following this revelation, Checkmate of Glassnode likened Tether to a CBDC, and other prominent figures in the crypto space, like Charles Hoskinson, expressed astonishment at Tether’s measures.