Why tether, the world’s third-biggest cryptocurrency, has got economists worried?

  • Tether is the third-biggest cryptocurrency in the world by market value. And it’s got some economists — including an official at the Federal Reserve — worried.
  • Boston Fed President Eric Rosengren recently raised the alarm about tether, calling the cryptocurrency a potential financial stability risk.
  • Some investors believe a loss of confidence in tether could be crypto’s “black swan,” an unpredictable event that would severely impact the market.

What is tether?

Chances are you’ve heard a thing or two about bitcoin. But what about tether?

Why is it controversial?

Some investors and economists are worried tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg.

Market contagion

Analysts at JPMorgan have previously warned that a sudden loss of confidence in tether could result in a “severe liquidity shock to the broader cryptocurrency market.”

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