Does Tether Pose Systemic Risk to Crypto Markets?

The Interview - Crypto ·
Featuring Cas Piancey and Travis Kimmel

Published on: February 4th, 2021 • Duration: 51 minutes

Cas Piancey, researcher and skeptic, joins Travis Kimmel, Real Vision president, to discuss concerns over the stable coin, Tether, and the potential systemic risk it poses to the cryptocurrency ecosystem. Piancey explains his own background, stating that he has been following Tether and the concerns around it since 2017. He mentions that Tether has a relatively low market cap compared to Bitcoin and the crypto ecosystem as a whole, but that the velocity of Tether is high enough that it could potentially impact the entire crypto market valuation. Tether being so deeply embedded into the crypto ecosystem warrants concern and skepticism about its robustness. They discuss the importance of supply audits on stable coins and the need for these to happen regularly to prevent certain types of attacks or fractional reserves of the collateral assets. Filmed on January 29, 2021.

Key Learnings: Stable coins may pose a systemic risk to the crypto markets as they are so deeply embedded in ongoing activity within the asset class. Even if the market cap of a stable coin is low compared to the overall market, the pervasiveness of its use can harm the markets if the stable coin were to be exploited or shut down. Regular supply audit intervals can help prevent systemic concerns since they can periodically ensure sufficient collateral backing.