Tether’s Bank Problems Create Unease As Token Value Slides Below $1
Tether.to’s USDT token has slid below parity with the dollar as its banking woes continue in Taiwan.
Tether.to’s banking woes continue as international customers face a freeze on wire deposits, prompting speculation about the future of its USDT token.
“Since April 18, 2017, all incoming international wires to Tether have been blocked and refused by our Taiwanese banks. As such, we do not expect the supply of tethers to increase substantially until these constraints have been lifted,” an announcement published on Friday reads.
Tether consists of so-called USDT tokens which are issued to customers in lieu of USD for trading on crypto-only exchanges such as Poloniex.
Earlier this month, both Tether and cryptocurrency exchanges OKCoin and Bitfinex faced a cut to wire transfer services from Taiwanese banking partners, resulting in a bottleneck for international investors.
While USDT is designed to trade 1:1 with USD, its value began sliding following the problems, with current prices around $0.91.
“For customers with bank accounts outside of Taiwan, we are diligently pursuing alternate funding channels. New banking corridors are in the process of being established, and we are speaking with integrators of USDT about the possibility of intermediate customer redemption processes,” the announcement continues.
“Until then, we are asking our customers not to send any additional incoming wires until we can provide a reliable method of receiving funds.”
An accompanying blog post by Octavius Labs Product Lead Jimi Smoot cast doubt about how the token could retain value if no solution were tabled.
“...It seems that the market believes that Tether has become slightly less Tethered. I wonder how much more the price will slide each day that the wire capabilities are down,” he wrote.
USDT holders wishing to convert back to USD can currently use US exchange Kraken to do so, subject to what Smoot describes as a “premium” in view of Tether’s current problems. This effective fee is proportional to around seven percent of the trade.