Rapid Increase in Tether Supply Raises Concerns of Manipulation, Creative Accounting

Tether has always been a controversial token – claimed to be redeemable for fiat currencies but shunned by the fiat banking system. However, the rapid expansion in Tether supply has raised concerns about whether this could be one of the reasons for the overall cryptocurrency boom.

What is Tether?

According to the Company’s website, Tether is a cryptocurrency whose value is anchored or ‘tethered’ to the value of national currencies like the US dollar. Tether.to claims to have combined the best of both worlds – a stable currency value and benefits of Blockchain technology. Each tether in circulation is supposed to be backed by a dollar held by the Company in reserve.

Supply: +10,000% in one year, +43% in November

The overall supply of tether has rapidly increased in 2017. Since the price of each tether is pegged to fiat (dollar or euro), the overall market capitalization reflects the underlying supply of tethers. The total market cap of tether has shot up from $6.9 mln in November 2016 to $645 mln currently. That is 100x increase in supply in the last year.

A significant portion of the increase has occurred in the 15 days of November 2017 – the supply / market cap has increased by $200 mln in that time. Since each tether is supposed to be backed by a reserve of fiat currency, questions are being raised about how Tether (the company) has managed to expand its balance sheet so much in the last year…

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