Tether Confirms Its New Banking Partner Is Deltec Bank, Provides Proof of Funds

Siamak Masnavi

On Thursday (1 November 2018), Tether announced that it had set up a banking relationship with Deltec Bank & Trust, which is based in The Bahamas.

This is how Tether announced the news on Twitter:

Over on its website, Tether gave an explanation for their silence over the past few several weeks about their banking arrangements. Deltec had only accepted Tether after performing extensive due diligence:

"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. 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."

To reassure holds of its stablecoin (USDT), Tether stated that:

  • Deltec would be reviewing them on a regular basis.
  • It is "registered with the Financial Crimes Enforcement Network of the US Department of the Treasury and maintains the highest standards of AML/CFT procedures."
  • USDT is fully collateralized with USD deposits at its bank(s).

However, to really hammer home the point that it was solvent (unlike what some people were saying on Twitter and on other social median platforms), it provided a letter dated 1 November 2018 from its new bank that seems to confirm that Tether does indeed have a balance in its USD account of $1,831,322,828, which exceeds the amount of tethers currently in circulation:

Deltec Letter.png

Although this letter will by no means satisfy Tether's harshest critics (such as Twitter account "Bitfinex'ed") since it does not qualify as any kind of audit, there is no name of a bank official on the letter, there is no official stamp, and there is only the mention of the USD balance as of close of business on 31 October 2018 with no accompanying statement showing when the account was opened and what activities have taken place since that date.

Twitter user "Bitfinex'ed", who is probably the most vocal critic of both Tether and Bitfinex, had this to say about today's announcement:

However, with regard to full audits of fiat-backed stablecoins, we should recall the words of Cameron Winklevoss, co-founder and President of Gemini Trust, who said on 17 October 2018:

According to data from CryptoCompare, Tether (USDT) is currently trading at $0.9926, and the number of tethers in circulation is 1,776,421,736. 

Featured Image Courtesy of Tether

Libra Association Members Consider Quitting Due to Government Pressure

Neil Dennis

Three founding members of the Libra Association, the cryptocurrency project announced by Facebook earlier this year, are considering withdrawing from the group following government and regulatory opposition.

A report in the Financial Times on Friday suggested that two - unnamed - members of the Association are discussing their "right next steps". A further member - also unnamed - was reportedly concerned that its support for the project will raise regulatory scrutiny of its own business.

Founding Members

Among the 28 founding members are payments firms PayPal and Visa, internet marketplaces eBay and Booking Holdings, blockchain groups Coinbase and Xapo, and venture capitalists Andreessen Horowitz and Thrive Capital.

One of the partners told the FT:

Some of those conversations [about regulation] should have taken place before the launch, to understand how regulators would think about this, so there wasn’t so much pushback.

The backlash has not just been regulatory. Central banks are concerned about the impact on monetary policy, while governments have an obligation to protect their sovereign currencies. Indeed, such has been the furore over Libra that Facebook admitted on July 31 that the cryptoasset may never be launched.