Concern about cryptocurrencies could lead regulators to crack down

Tether’s resilience masks investor unease about the exchange that hosts it

Concern about cryptocurrencies could lead regulators to crack down 20190504_FND003_0

Concern about cryptocurrencies could lead regulators to crack down 20190504_FND003_0

DAYS AFTER allegations of misuse of customer money against Tether rocked the cryptocurrency world, the shock wave has temporarily subsided. The four-year-old currency, which fell to 97 cents last week, has returned to parity with the American dollar. And after a 10% fall, to $4,953, the price of a single Bitcoin, its best-known peer, has steadied at around $5,400. But cryptocurrency-watchers remain wary. Beneath the surface, trouble may be brewing.

Doubts had long swirled about the bona fides of Tether, which has more than $2.8bn-worth in circulation, and Bitfinex, the exchange it is traded on. On April 25th New York’s attorney-general, Letitia James, accused both of a cover-up intended to hide a loss of $850m in client and corporate funds. That hit the value of other cryptocurrencies because of Tether’s unique status. Cryptocurrencies stem from libertarian attempts to create a currency resistant to central control. Many exchanges thus struggle to get hold of dollars, because banks, which must comply with fraud and money-laundering rules, do not want their custom. For them Tether, which is pegged one-to-one to the greenback, acts as a dollar substitute. Traders use it for transfers between one cryptocurrency and another.

https://www.economist.com/finance-and-economics/2019/05/04/concern-about-cryptocurrencies-could-lead-regulators-to-crack-down

Concern about cryptocurrencies could lead regulators to crack down

Concern about cryptocurrencies could lead regulators to crack down

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