Tether has been one of the biggest question marks in the crypto space in recent years, and that hasn’t changed as adoption has grown. Decentralization has always been a hot topic, and while the word itself is not mentioned even once in Satoshi Nakamoto’s Bitcoin white paper, it is a core identity that has been locked into Bitcoin and crypto in general since its inception currency.
Of course, decentralization is only a core component of one of the many question marks surrounding Tether. This week, however, the focus was on that as Tether announced that it would freeze around $160 million worth of stablecoin USDT. Let’s see what we know.
Tether faces scrutiny around decentralization
Three ethereum-based USDT addresses holding more than $150 million in value were frozen this week, according to Tether officials, as the blockchain said the move was due to a “law enforcement request.” The blockchain has now blacklisted more than 560 addresses since November 2017. This is the first time Tether has blacklisted it in 2022.
Tether reps have previously stated that “by freezing addresses, Tether is able to help recover funds that have been stolen or compromised by hackers”, leading to a heated debate in the crypto community (one largely embracing decentralized blockchains) over the degree of power in the blockchain Authorities should be able to integrate through the web. In general, longtime crypto loyalists aren’t ecstatic about the extent of Tether’s control over the market — even if the end result is to make up for lost funds due to the actions of malicious bad actors.
Additionally, recent U.S. government scrutiny of the likes of stablecoins (especially USDT and USDC) has arguably led to a surge in more decentralized alternatives, namely UST and DAI (the third and fourth largest stablecoins in the market).
As broader cryptocurrency markets have grown, so too have stablecoins such as USDT; however increased scrutiny from crypto loyalists have left many wondering about the extent of power that the network should carry. | Source: CRYPTOCAP: USDT on TradingView.com
where are we going from here
Granted, Tether is definitely somewhere in between. The leading stablecoin is fast approaching a $100B market cap and salivating at the thought of cementing its place as the “go-to” stablecoin in the fast-growing world of cryptocurrencies.
Additionally, government officials may step up their communication with blockchain as illicit activity and cryptocurrency-based crimes nearly double in 2021 compared to 2020, according to a report by Chainalysis.
As we start the new year, expect more of the same for Tether and maybe even Circle’s USDC – as both look to entrenched cryptocurrencies in more mainstream outlets, with a certain degree of centralization that ensues transformation is inevitable.
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Featured image from Pexels, Charts from TradingView.com The writer of this content is not associated or affiliated with any of the parties mentioned in this article. This is not financial advice.