Tether came under increasing pressure on Thursday, pushing the price of one of the most important assets in the global cryptocurrency markets well below its one-dollar peg.
The $80 billion stablecoin, which is designed to track the one-to-one value of the US dollar, fell to 96.29 cents early in European trading Thursday, according to the CryptoCompare index that tracks trading at the world’s highest digital level. asset exchange.
Stablecoins claim to offer cryptocurrency traders a safe place to park their money between bets on volatile cryptocurrencies. Tether, the world’s largest stablecoin, plays an important role in facilitating trading across the cryptocurrency market and also provides a link with the traditional financial system.
Tether’s drop of more than 3 percent below its $1 price tag has triggered a rebound in the digital asset market. Bitcoin, the most traded cryptocurrency, is down nearly 7 percent to $26,250, its lowest level since December 2020.
Tether’s decline comes after TerraUSD, a much smaller stablecoin, became completely unpegged to the dollar. Tether, unlike TerraUSD, claims to be backed by a basket of dollar-based assets. However, her backers refused to provide exact details of her holdings.
The group was hit with a $41 million fine from the US Commodity Futures Trading Commission last year over allegations that it made misleading statements from at least June 2016 to February 2019 about having enough dollar reserves to support each of its trading stablecoins.
Regulators have cited stablecoins, which are largely unregulated in most markets, as a risk to financial stability. The Federal Reserve said earlier this week that only three stablecoins, Tether, USDCoin and Binance USD, make up 80 percent of the $180 billion market.