Tether, the largest stablecoin issuer, has grown its controversial stablecoin lending activities in 2023, according to its latest report. This comes after Tether pledged to phase out such lending by 2024.
Tether’s latest quarterly update showed $5.5 billion in loans as of June 30, up from $5.3 billion in Q1 2023. Tether claims the increase came from accommodating long-time client loan requests.
Previously, Tether’s booming stablecoin loan business enabled customers to borrow USDT using collateral. However, these deals faced heavy criticism for lacking transparency.
A December 2022 report questioned whether Tether holdings adequately backed redemptions. In response, Tether had announced plans to eliminate lending and called concerns “FUD,” claiming over-collateralization.
Tether’s renewed growth in stablecoin lending has resurrected doubts even as the firm reports massive profits. With dominance rising amid crypto’s downturn, Tether maintains its commitment to phasing out lending by 2024.
Yet the latest lending uptick suggests potential delays in reducing these opaque loan activities that could risk stability if not managed prudently. As scrutiny persists, Tether must prioritize transparency in winding down stablecoin lending.
