- Deutsche Bank analysts have recently published a study suggesting that most stablecoins are likely to fail, based on an analysis of 334 currency pegs over the past 200 years.
- The study argues that the few currency pegs that have survived since 1800 have done so due to credibility, reserves, and a tightly controlled environment – attributes they claim most stablecoins lack.
- Particular attention was drawn to Tether (USDT), the world’s largest stablecoin with a market cap of $110 billion, which the analysts claim operates in a market filled with speculation and lack of transparency.
- Despite Tether regularly publishing reserve attestation reports with help from BDO, the fifth-largest accounting network globally, it has yet to undergo a full audit from a Big Four accounting firm.
- Prior to publishing its attestation reports, Tether was required to pay $41 million in fines to the Commodity Futures Trading Commission (CFTC) for misleading statements about its reserve composition.
- The study also emphasized the importance of macroeconomic factors for stablecoin issuers, suggesting that issues around governance and speculative forces could indicate a potential de-pegging.
- In response to the Deutsche Bank report, Tether criticized the study for relying on “vague assertions” and lacking “concrete data to forecast a decline in stablecoins more broadly.”
Deutsche Bank analysts predict the failure of most stablecoins based on an analysis of historical currency pegs. The study highlights the importance of credibility, reserves, and a tightly controlled environment, which they claim most stablecoins lack.
Deutsche Bank’s Stablecoin Predictions
Deutsche Bank analysts have recently published a study suggesting that most stablecoins are doomed to fail. This prediction is based on an analysis of 334 currency pegs over the past 200 years. The analysts argue that the few currency pegs that have survived since 1800 have done so due to credibility, reserves, and a tightly controlled environment – attributes they claim most stablecoins lack.
Tether Under Scrutiny
Particular attention was drawn to Tether (USDT), the world’s largest stablecoin with a market cap of $110 billion. The analysts claim that Tether operates in a market filled with speculation and lack of transparency. Despite Tether regularly publishing reserve attestation reports with help from BDO, the fifth-largest accounting network globally, it has yet to undergo a full audit from a Big Four accounting firm. Prior to publishing its attestation reports, Tether was required to pay $41 million in fines to the Commodity Futures Trading Commission (CFTC) for misleading statements about its reserve composition.
Macroeconomic Factors and Stablecoin Survival
The Deutsche Bank study also emphasized the importance of macroeconomic factors for stablecoin issuers. The researchers suggested that issues around governance and speculative forces could indicate a potential de-pegging. In response to the Deutsche Bank report, Tether criticized the study for relying on “vague assertions” and lacking “concrete data to forecast a decline in stablecoins more broadly.”
Conclusion
The Deutsche Bank study presents a skeptical view of the future of most stablecoins, highlighting the importance of credibility, reserves, and a tightly controlled environment for survival. While Tether, the world’s largest stablecoin, has come under scrutiny, it remains to be seen how the stablecoin market will evolve in response to these challenges.
