Tether has been one of the most baffling features of cryptocurrencies in recent years, and this hasn’t changed as use has grown.
While the term “decentralization” isn’t mentioned in Satoshi Nakamoto’s Bitcoin whitepaper, it has been a primary identity linked with bitcoin, and crypto in general, since its inception.
To begin with, decentralization is just one of many unanswered Tether questions. On the other hand, Tether said this week that about $160 million in stablecoin USDT will be frozen, focusing attention on this. Let’s take a look at the information we already have.
Tether is being scrutinized
Due to a request from law enforcement, three Ethereum-based USDT addresses with a combined value of more than $150 million were frozen this week, according to Tether administrators. Approximately 560 addresses have been blocked from the blockchain since November 2017. It was Tether’s first attempt at blacklisting in 2022.
Tether representatives have previously stated that by freezing addresses, Tether has been able to assist in the recovery of funds stolen or compromised by hackers, igniting heated debates in the crypto community – which has largely embraced decentralization – about how much control blockchain authorities should have over the network.
Furthermore, the recent US government inquiry into stablecoins – particularly USDT and USDC – is likely to have resulted in significant growth of more decentralized alternatives, particularly UST and DAI, the market’s third and fourth-largest stablecoins, respectively.
What does the future hold for USDT?
Without a doubt, Tether is stuck between a rock and a hard place. The leading stablecoin is closing in on a $100 billion market cap, and it’s drooling at the thought of establishing itself as the “go-to” stablecoin in an era of rapid crypto development.
Furthermore, according to a Chainalysis report, criminal activity and cryptocurrency-based crime nearly quadrupled in 2021 compared to 2020, indicating that government authorities are expected to utilize blockchain technology more.
Expect more of the same from Tether and possibly even Circle’s USDC as the new year begins — as the two strive to establish crypto in more mainstream channels, some degree of centralization is unavoidable.