- Deutsche Bank has raised concerns over the future of stablecoins, particularly Tether, predicting that most pegged stablecoins are likely to fail.
- After analyzing around 334 altcoins, the banking giant found that only 14% of them have managed to survive so far.
- Tether has dismissed the report, stating that it lacks substantial evidence.
Deutsche Bank’s recent report predicts a bleak future for most stablecoins, particularly Tether, raising questions about their reliability and survival in the crypto market.
Deutsche Bank’s Red Flag on Stablecoins
Deutsche Bank’s research analysts recently raised a red flag in the stablecoin market, stating that most stablecoins are unlikely to continue progressing. This prediction comes at a time when major market players like Ripple expect the stablecoin market to reach $3 trillion by 2028. The bank arrived at these interesting conclusions after analyzing approximately 334 stablecoins, finding that only 14% of them have managed to survive so far.
Deutsche Bank: Altcoins Need to Provide More Reliability
Stablecoins, which typically maintain a one-to-one match with fiat currencies like the Dollar and Euro, provide convenience for crypto traders and protect them from volatile price fluctuations. However, Deutsche Bank analysts believe that the lasting success of stablecoins depends on reliability, reserve support, and strict operational controls, qualities that few major stablecoins currently possess. They state, “The 30% de-peg rate among some stablecoins is therefore not surprising. Many more collapsing stablecoins are hard to account for.”
Doubts Over Tether Increase
The research team expressed concerns about Tether due to its dominant position in the stablecoin market, characterized by speculation and lack of transparency. They highlighted Tether’s $41 million fine from the Commodity Futures Trading Commission (CFTC) due to misleading statements about its reserve assets. Analysts also emphasized potential risks associated with Tether’s significant role in the crypto derivatives market, which could exacerbate losses and increase leveraged transactions.
Conclusion
Although Tether has responded to these concerns by publishing three-month attestations of its reserves following agreements with both the CFTC and New York state authorities, Deutsche Bank’s report raises important questions about the future of stablecoins. As the crypto market continues to evolve, the survival and success of these digital assets will depend on their ability to provide reliability, transparency, and strict operational controls.
