The Weiss Ratings team, one of the most important rating agencies in the world, warned investors not to use Tether (USDT).
The team notes that USDT is not 100% backed by fiat and that Tether operates as a partial reserve bank. Warning about the use of USDT, the team recommends USDC, which is subject to constant audits and is 100% backed. However, DAI stands out as an important alternative for the team, given its transparency through smart contracts.
Not Supported By 100 Percent
The Weiss Ratings team gave stern advice, suggesting that cryptocurrency traders should avoid using Tether’s stablecoin (USDT). The Weiss team shared this view on Twitter and announced that USDT is not 100% backed by fiat as the company claims. In addition, according to the team, Tether operates as a partial reserve bank and its balances are held in private accounts that are not publicly audited.
USD Coin (USDC) and Dai (DAI) Safer
Weiss Ratings proposed USD Coin as an alternative to Tether (USDT). According to the team at Weiss, USDC is subject to regular audits from at least five accounting firms, and its tokens are 100% backed by the parent company-owned fiat:
“Unlike USDT, USDC is subject to the inspection of at least five accounting firms. According to these reports, USDC is more than 100% supported. That’s why we currently prefer #stablecoin. ”
However, the DAI is also pegged to the US dollar not by the promises of the issuer, but by smart contracts that use market forces to implement and maintain pegging. These smart contracts are transparent and auditable, so anyone who wants to dig deeper can see how they should work.
Tether (USDT) Still No.1 Stablecoin
Weiss Ratings’ advice is similar to warnings about Tether by veteran traders Peter Brandt in mid-August. However, Tether’s parent company denies all these warnings against USDT. In addition, Tether is a very important cogwheel of the DeFi machine, and its demand in this sense caused the market value of USDT to surpass $ 15 billion.
At the time of writing, Tether’s total asset value was $ 15.232 billion. This figure was around $ 4 billion at the beginning of 2020, which means the market value will quadruple by the end of the year.