Deltec Bank & Trust is an offshore bank that holds reserves for stablecoin issuer Tether. The company’s chief investment officer (CIO) Hugo Rogers has announced the bank’s investment of customer’s funds into Bitcoin in a 2020 review video. Although, it is unclear which clients the bank is currently holding the Bitcoin for, also if Tether stablecoin is indirectly backed by Bitcoin.

Deltec Reveals Bitcoin Holdings

Tether’s dealings with Deltec were initially revealed in 2018. It is one of the two banks where Tether is maintaining its reserves. However, Tether is not the only client that Deltec is using its services, other companies such as FTX’s CEO, Sam Bankman-Fried also confirmed that his company is already using the banking services of Deltec.

In a 2020 review video, chief investment officer Hugo Rogers of Deltec’s holdings stated:

“It also includes a large position in bitcoin, which has received a lot of attention recently. We bought bitcoin for our clients at about $9,300, so that worked very well through 2020. And we expect it to work well in 2021 as the liquidity crisis continues to run hot.”

Tether is the third-largest cryptocurrency by market capitalization and the most widely used stablecoin. There is $24.3 billion USDT currently in circulation. This signifies that Tether must have that much of the US dollar in its reserves.

Is Tether Indirectly Backed by Bitcoin?

The announcement of Hugo Rogers during a year-in-review video raises questions on whether the dollar-pegged USDT stablecoin is backed by cash or cash equivalents or is actually backed in any way by Bitcoin.

According to Tether, its reserves mainly includes traditional currency and cash equivalents and might include other assets and receivables from loans made by Tether to third parties. Currently, there is no mention of backing USDT with Bitcoin. Any cryptocurrency backing would in fact destabilize the idea of a stablecoin.