Tether was once the stablecoin king. Now its dominance is threatened by newcomers and legal uncertainty.

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In 2018, Jeff Bezos told Insider that innovators “have to be willing to be misunderstood.” So when Stuart Hoegner, the top lawyer at tether, began an indignant blog post in May citing Bezos, it suggested he saw his product as the unfairly maligned bleeding edge of a crypto revolution.

Others aren’t so sure. Regulators are training their sights on tether, the biggest of the dollar-pegged cryptocurrencies known as stablecoins.

On Monday, reports circulated that the DOJ was eyeing a criminal bank fraud case against tether execs’ conduct years ago. The next day, further reports indicated a presidential committee led by Treasury Secretary Janet Yellen was homing in on tether, likening it to an unregulated money-market fund – the kind which caused financial turmoil during the 2008 crisis and again when COVID-19 rattled markets.

But even as tether’s legal troubles reach an apex, the stablecoin has in some ways become less relevant.

So far this year, tether’s share of the overall stablecoin supply has tumbled from 75% to 57%, according to data from The Block. Behind the decline are new challengers, including Circle’s USD Coin, Binance USD, Gemini, and DeFi-focused Dai.

The problem for tether is that the technological barriers around its stablecoin business are not very high.

All the various US dollar-backed stablecoins “are not that different in terms of what they’re representing,” Denelle Dixon, CEO of the Stellar Development Foundation, told Insider. Stellar hosts USD Coin on its network.

“But the companies that support those tokens and what they do behind the scenes is really important,” she added.

And what tether does behind the scenes has become a central focus. Alongside the recent bank fraud allegations, past issues with its parent company’s misconduct have dogged tether, leading New York state to ban trading.

Moreover, there are two sets of complaints about the stablecoin itself: the quality of its reserves and transparency.

First, regulators worry that tether’s reserves – which in principle should back each tether with one dollar – could be of dubious quality. After the company released a reserves breakdown this year, JPMorgan estimated that its $30 billion in commercial paper, a cash-like type of short-term corporate debt, would make tether one of the world’s biggest investors in the asset.

Yet unlike other massive commercial paper holders, tether does not disclose the make-up of what it owns. Hoegner told CNBC his company’s holdings included international paper – leading anchor Jim Cramer to speculate tether could be a “ticking time bomb” holding default-prone Chinese paper. A recent academic paper suggested tether could be subject to bank runs, where the company is unable to meet a wave of dollar redemptions.

Second, some think tether’s disclosures, which were recently beefed up, are still insufficient. The company has not yet produced a full independent audit, though Hoegner told CNBC that one was “months away, not years.” It has, however, produced an independent “attestation” – essentially verification that tether’s balance sheet is what the company says.

Tether has disputed or denied the accusations against it. It says its commercial-paper holdings are highly rated, it has plenty of cash to cover redemptions, and its disclosure efforts are setting a “new industry standard for transparency.”

“It’s a classic entrepreneur’s dilemma,” Sadie Raney, CEO of crypto hedge fund Strix Leviathan, told Insider. Firms operating in scantily regulated industries, like tether, must choose whether to plow ahead and risk blowback or take it slow and give up market share, she said.

For Raney, who also co-founded the SEC-registered crypto robo-advisor Makara, using tether is too risky when her business relies on a government green light.

“If we utilize a stablecoin, we do not use tether, [although] we have in the past,” said Raney, whose company now uses Gemini. “The regulatory uncertainty with tether was what kept us from continuing to use it.”

Not everyone is deterred, though. Valkyrie CIO Steven McClurg told Insider that tether’s public attestation helped soothe some of his prior fears, saying its publication has been “really good for the industry.”

“I don’t think there are really any concerns anymore,” he added.

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Bitcoin edges lower for its worst weekly performance in over a month as as cryptocurrencies struggle to recover from heavy sell-off

Representations of virtual currency bitcoin are placed on US dollar banknotes taken May 26, 2020.
Representations of virtual currency bitcoin are placed on US dollar banknotes taken May 26, 2020.

Bitcoin slipped Friday to clock worst weekly performance in more than a month as the world’s largest cryptocurrency by market cap inches closer to a key support level of $30,000.

Bitcoin on Friday morning was trading at $31,363 as of 8:30 a.m. ET, according to data from CoinMarketCap.

An eventual break below this level will be crucial, Julius de Kempenaer, senior technical analyst at StockCharts.com, told Insider.

“If and when this happens, $20,000 is on the cards as the next level of support to watch,” said.

The selling pressures began on Thursday when the digital asset suffered its biggest drop in about 10 days. Bitcoin in the past month has been trading in a range at just around half its April peak price of nearly $65,000.

Alongside bitcoin, other cryptocurrencies have slid in the last 24 hours:

Cryptocurrencies have struggled to rebound from a massive crash in May when the value of the total market dropped by nearly half in just seven days.

A number of headwinds have been blowing against the crypto market since the brutal sell-off.

Federal Reserve Chair Jerome Powell on Thursday told the Senate Banking Committee that cryptocurrencies have failed to become a viable payment method. A day earlier, he also said the US won’t need stablecoins and cryptocurrencies if the central bank were to issue its own digital currency.

There have also been problems plaguing the the world’s largest cryptocurrency exchange, Binance, which is weathering an intensifying regulatory crackdown. Italy most recently joined a growing list of nations to issue a warning against the exchange, saying it is not authorized to do business in the country.

Bitcoin is also under increasing fire for its impact on the environment from critics who points to the heavy energy consumption of bitcoin mining.

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From Solana to Chainlink to Chiliz, here are 15 altcoins headlining a world of tokens that extends well beyond bitcoin – and what they’re all used for

The photo shows physical imitations of cryptocurrency
  • Bitcoin may be the most know cryptocurrency, but there is a world of altcoins out there with their own specific uses.
  • Apart from currencies, these cryptoassets have various utilities from “proof of stake” to decentralized finance.
  • Insider collected the most common types of cryptocurrencies and 15 examples from a wide world of digital assets.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investing in cryptocurrencies has been synonymous with investing in bitcoin, especially for those new to the digital asset space. Bitcoin, after all, is often regarded as the first modern cryptocurrency, founded by an anonymous developer under the pseudonym Satoshi Nakamoto in 2009.

“We think bitcoin had the first-mover advantage,” Ian Balina told Insider. Balina is the founder and CEO of Token Metrics, a data-driven investment research platform for cryptocurrencies.

Today, bitcoin boasts of a $1 trillion dollar market capitalization and enjoys the support of 22 public companies, according to data by CoinGecko. These include major firms from MicroStrategy to Tesla. Not included in that number are major corporations adopting bitcoin such as Goldman Sachs, Bank of New York Mellon, and PayPal.

Ether comes in at a close second. The global and open-source platform for decentralized applications that runs on the ethereum blockchain, is the runner-up to bitcoin with a valuation of $318 billion. Many analysts predict it will surpass the king of cryptocurrencies down the road, citing ether’s ability in storing computer codes that power contracts and applications.

Beyond these two, there is a wealth of crypto assets in the nascent space all with different utilities.

“We’re thrilled about the growing adoption of crypto beyond bitcoin,” Greg King, CEO of Osprey Funds, a crypto asset manager that launched Osprey Bitcoin Trust, told Insider. “Investor and market appetite continues to grow for funds providing access to some of the most exciting coins and tokens.”

While cryptocurrencies are difficult to separate into neat and comparable categories, London-based fintech entrepreneur Viktor Prokopenya said the underlying popularity metrics can be borrowed from more traditional asset analysis. He named market capitalization, price volatility, and momentum as examples.

“I believe we will see an increasing disregard for traditional portfolio theory and a reduction in diversification by many retail investors,” he told Insider. “Of course, this could work out for the better but conventional prudence is advised.”

Insider, with the help of experts, lists here the five most common types of crypto uses with 15 examples of coins from across the space.

1. Currencies

This is the most commonly known utility of cryptocurrencies. Several companies have allowed the purchase of their products using cryptocurrencies such as Tesla car, while dogecoin can be used to buy Dallas Mavericks’ tickets and merchandise. Other currency examples are litecoin and bitcoin cash.

2. Stablecoins

A stablecoin is a type of cryptocurrency that is backed by a reserve, which could be a cryptocurrency, a fiat currency, or a commodity. For instance, tether is pegged to the US dollar. USD coin-created by Coinbase and Circle-and dai are also both pegged to the American currency.

3. Proof of Stake

This is a mechanism that regulates the process of transactions between users, ensuring that these are verified and added to a blockchain’s public ledger. PoS was born out of another popular algorithm, Proof of Work. Both have the same goal of reaching consensus in the blockchain, Binance Academy explained, and only differ in the process.

Examples of cryptocurrencies that use PoS are ether (decentralized applications), cardano (academic research), and solana (blockchain applications).

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

4. Decentralized Finance

Also known as DeFi, this is an umbrella term for various applications that use public blockchains and crypto assets to disrupt the traditional financial sectors. DeFi is an alternative to a system that is tightly controlled and held together by decades-old infrastructure, according to a website funded by the Ethereum Foundation.

DeFi, an industry now worth over $66 billion, is a major reason for ether’s recent record-breaking week during the end of April.

Other cryptocurrencies that use DeFi applications according to Balina are: uniswap, a decentralized exchange for trading ethereum-based tokens via an automated order book; chainlink, a decentralized oracles network for bringing off-chain data onto the blockchain; and aave, a decentralized lending platform.

“In the last few years, we have seen DeFi also take up a significant spot within any listing category,” Ben Weiss, CEO of bitcoin ATM operator CoinFlip, told Insider – adding that many factors remain to be seen after the London upgrade in June.

Weiss continued: “I would expect the DeFi space to grow as the momentum of both DeFi usage as well as innovation is growing in the billions of dollars every other day. Decentralized market makers like uniswap and pancakeswap changed what it means to be liquid and crypto accessibility in general.”

5 . Non-Fungible Tokens

NFTs are unique digital assets secured on a blockchain supported by ethereum. Each NFT has its own signature, which can be verified in the public ledger and cannot be duplicated. When people buy NFTs, they gain the rights to the unique token on the blockchain, and not the artworks, collectibles, or tweets linked to the NFTs themselves.

Many of these are built on ether, Osprey said, but flow, tezos, and algorand also support NFTs.

“The potential applications of NFT technology are virtually endless,” he added. Other examples are theta network (video streaming blockchain) and chiliz (sports industry).

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Tether market capitalization hits $50 billion as use of the US dollar stablecoin grows

GettyImages 1025441174
In this photo illustration, a smartphone displays the Tether market value on the stock exchange via The Crypto App.

The US dollar stablecoin Tether surpassed a market capitalization of $50 billion on Sunday.

A stabelcoin is a type of cryptocurrency that is backed by a reserve. In the case of tether, or USDt, it is pegged to the dollar, affording it more stability compared to other cryptocurrencies.

Paolo Ardoino, CTO at Tether, said this $50 billion mark has been a milestone since Tether’s founding in 2014. This means that there now more than 50 billion USDt in circulation, with daily trading volume exceeding $140 billion, data from CoinGecko shows.

“Tether’s success is a blueprint for a central bank digital currency (CBDC) and a banking system of the future,” he said in a statement. “We are truly humbled by the pivotal role that tether now plays in the digital token ecosystem across myriad protocols and applications.”

The exponential growth of tether – doubling from $18 billion at the start of 2021 – indicates growing use and positive sentiment toward the stablecoin.

Data from Sentifi, an alternative data company, on Monday show that tether had the highest sentiment score across social media, news, and other online content.

On April 22, newly listed Coinbase, the largest cryptocurrency exchange in the US, gave its stamp of approval by listing tether to Coinbase Pro.

Still, tether is not without controversy. The fifth-largest cryptocurrency and most popular stablecoin by market capitalization went through a legal battle with New York that began in 2019.

“Tether’s claims that its virtual currency was fully backed by US dollars at all times was a lie,” New York Attorney General Letitia James said in a February 2021 statement, banning the stablecoin from trading in the state.

She continued: “These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”

Tether agreed to pay an $18.5 million fine to settle the dispute, though admitted to no wrongdoing.

“Contrary to online speculation, after two and half years there was no finding that Tether ever issued tethers without backing, or to manipulate crypto prices,” it said in a statement.

Since the start of the year, tether added $29 billion to its market cap, a gain that is greater than the combined valuation of all rival stablecoins.

Tether peaked at an all-time high of $1.26 in July 02018, according to CoinGecko. When it first debuted, the price of each token was $1.

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