- An insider scoop has revealed Tether’s move to enlist a Bahamian financial institution.
- The undisclosed intricacies of Tether’s banking partnerships have become a focal point.
- Tether’s ties with traditional U.S. banks have appeared strained.
Stablecoin leader Tether is broadening its range of banking connections by enlisting an additional financial entity based in the Bahamas. According to insiders, Britannia Bank & Trust, a privately-owned institution operating within the Bahamas, has now been responsible for processing dollar transfers for Tether.
Tether Reinforces Connection with Traditional Financial Systems
This strategic move arrives while growing inquiries concerning the reserves held by the stablecoin issuer and an overall atmosphere of doubt encompassing its level of openness.
Tether, whose USDT token is crucial in the approximately $1 trillion cryptocurrency market, appears to be fortifying itself against a progressively skeptical financial landscape.
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The firm has faced a strained rapport with U.S. banks, most notably in 2017 when Wells Fargo terminated its correspondent banking services. Moreover, in 2021, Tether settled allegations with the New York Attorney General, igniting concerns over its publicly stated reserves and unpublicized deficits.
Tether’s inclusion of Britannia Bank might signify its challenges in upholding robust connections with conventional financial systems. The bank’s parent company, Britannia Financial Group, has been broadening its offerings related to cryptocurrencies.
Britannia Buys Crypto Firm, Founder Faces Bribery Trial
In April, Britannia acquired Alphaplate Ltd., a self-owned cryptocurrency trading firm, highlighting its optimistic attitude towards digital assets. Nevertheless, the company’s founder, Julio Martin Herrera Velutini, is awaiting trial due to bribery charges, further adding intricacy to Tether’s fresh banking alliance.
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The stablecoin issuer has not been completely upfront regarding its banking associations, giving rise to heightened examination and conjecture.
Patrick Tan, the general counsel for ChainArgos, remarked,
“The secrecy surrounding Tether’s banking relationships continues to be a major impediment for developing the cryptocurrency industry, deterring regulatory approvals on other matters, and discouraging traditional asset managers with little tolerance for regulatory risk from more active participation in the space.”
On the Flipside
- The secrecy surrounding its banking relationships fosters doubts about the stability of its financial infrastructure and operations.
- Tether’s push to broaden its banking network could also be considered an effort to consolidate its control and influence within the cryptocurrency market.
- The lack of transparency hinders regulatory bodies’ ability to thoroughly assess and address potential risks associated with stablecoins and their underlying infrastructure.
Why This Matters
As Tether seeks to maintain its stance amid regulatory pressures and skepticism, its association with Britannia Bank signifies a notable shift far beyond their immediate partnership, resonating with the ongoing transformation of the broader crypto landscape.
To learn more about the scrutiny faced by the Federal stablecoin guidelines, read here:
Fed’s Stablecoin Guidelines Under Fire from GOP Committee Members
For insights into stablecoins’ recent challenges, despite surpassing traditional giants in 2022, read here:
Stablecoins Losing Ground Despite Surpassing Traditional Giants in 2022
