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A US FED official believes that Tether is a challenge to the financial stability and included the stablecoin among the plenty disruptors to short-term credit markets as we can see more in our Tether crypto news today.
The US FED official Eric Rosengren believes that Tether can be a challenge for the entire financial stability of the system and in the slide, the president of the Federal Reserve Bank of Boston listed it among the types of coins that are a challenge that the US Central Bank is watching. Rosengren included that the stablecoin among what he termed “new disruptors” to the short-term credit markets. He said:
“The reason I talked about Tether and stablecoins is if you look at their portfolio, it basically looks like a portfolio of a prime money market fund but maybe riskier. Tether has a number of assets that, during the pandemic, the spread got quite wide on those assets.”
“I do think we need to think more broadly about what could disrupt short term credit markets over time, and certainly stablecoins are one element. I do worry that the stablecoin market that is currently, pretty much unregulated as it grows and becomes a more important sector of our economy, that we need to take seriously what happens when people run from these types of instruments very quickly.”
Wall Street veteran and longtime BTC supporter Caitlin Long said the remarks are salient but what it was so interesting was the Fed Governor Lael Brainard and then Powell started talking stablecoins but now Rosengren talks “tether” by name which is an escalation. The CEO of Avanti Financial said:
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“The Fed is so practiced, … at ‘Fedspeak’ — such carefully constructed statements so that multiple sides of an issue can see their side in what the Fed said. That was basically the [case with] previous statements about stablecoins. But today the Fed escalated. Rarely are they so explicit like they were today.”
Long added that all BTC supporters that consider concerns about Tether overblown and should not just “shoot the messenger.” She commented on the company’s breakdown and the collateral behind USDT:
“I’ve both defended Tether as breakthrough technology while also calling out that its reserve disclosure opened more questions than it answered.”
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