Tether has been one of the biggest question marks in crypto in recent years, and that hasn’t changed as adoption has grown. Decentralization has been a hot topic, and while the word itself isn’t mentioned once throughout Satoshi Nakamoto’s Bitcoin whitepaper, it is a core identity that has been latched on to bitcoin, and crypto in general, since near inception.
Decentralization, however, is only one question mark around Tether. Tether has announced this week that approximately $160M of USDT stablecoin would be frozen. Let’s look at what we know.
Tether faces scrutiny around decentralization
Three Ethereum-based USDT addresses, holding north of $150M, were frozen this week, according to Tether officials, as the blockchain cited the move due to “a request from law enforcement.” The blockchain has now blacklisted over 560 addresses since November 2017. This was Tether’s first blacklisting operation in 2022.
Tether representatives have previously stated that “through the freezing of addresses, Tether has been able to help recover funds stolen by hackers or are compromised,” leading to heated debates in the crypto community – one that has largely embraced decentralization – over what degree of power blockchain authorities should be able to weild over the network. Long-time crypto loyalists are, generally speaking, not ecstatic about Tether’s level of control of the market – even if the end result is to replace funds that were lost due to the actions of malicious bad actors.
Furthermore, recent U.S. government scrutiny over the likes of stablecoins – notably USDT and USDC – have arguably led to substantial growth of more decentralized alternatives, namely UST and DAI – the third and fourth largest stablecoins in the market.
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Stablecoins like USDT have seen a rise in popularity as more cryptocurrency markets are opened. However, many have been questioned about how much power the network really should have. Source: CRYPTOCAP: USDT on TradingView.com | Source: CRYPTOCAP: USDT on TradingView.com
The Place We Are From Here
Tether’s situation is admittedly a little difficult. The leading stablecoin is rapidly approaching a $100B market cap, and is salivating at the thought of solidifying it’s stature as the ‘go-to’ stablecoin in a world of rapid crypto growth.
According to Chainalysis, the amount of illicit activity and cryptocurrency-based crimes nearly doubled by 2021, compared with 2020. Officials are also likely to increase their communications using blockchain.
As we kick off the new year, expect more of the same when it comes to Tether, and perhaps even Circle’s USDC – as the two look to ingrain crypto in more mainstream outlets, a degree of centralization to come with that is inevitable.
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