Can BDO silence Tether critics?

GB Market Commentary 22/08/2022

by Marcus Sotiriou

Bitcoin has fallen by over 10% since Friday, as it is now trading at around $20,900 and back below the 200 weekly MA (which is at around $23,100). Some believe that the significant sell off on Friday was caused by Celsius Network, who are bankrupt, receiving approval to sell mined Bitcoin to cover their operations. It has been speculated that Celsius sold 7000 Bitcoin on FTX spot which led to a cascade of liquidations.

Celsius’ woes have resulted in extreme fear and uncertainty surrounding the stability of the crypto market over the past few months. However, Tether, the largest stablecoin by market cap and a key component of the crypto ecosystem, has revealed a positive updated to its assurance process.

It has been announced that the company is now working with BDO Italia, who will conduct monthly Tether assurance reports based on the stablecoin issuers’ reserves. Previously, Tethers’ assurance reports were conducted by an auditor called MHA Cayman, but BDO are a top 5 accounting firm who could provide some needed clarity around Tether’s highly debated reserves.

In addition, the day after the BDO partnership was reported Tether stated, “as of June 30th, the CCR and BDO confirmed a more than 58% decrease in Tether’s commercial paper holdings over the prior quarter from $20 billion to $8.5 billion, which is on track with Tether’s commitment to the community.” A 58% decrease in commercial paper is a colossal step for Tether’s credibility, as many critics have claimed in the past that Tether owning Chinese commercial paper is a significant risk.

Tether’s biggest competitor Circle are also now being audited by a top 5 accounting firm (called Grant Thornton) as of June 2022, hence Tether integrating BDO is needed for them to remain the most adopted stablecoin issuer. I think this increase in transparency is a very promising step for the whole crypto space, as the legitimacy of stablecoins is a concern for many institutions.