Tether USDT Describes Itself As

USDT is a digital stablecoin pegged 1:1 to the USD. Tether, as the issuer, claims that all Tether tokens are 100% backed by Tether reserves - daily updates and attestations can be found via the Tether’s transparency page, however, reserves are not audidted by an established/regulated accounting firm. Initially launched on the Bitcoin blockchain using the Omni Layer Protocol, USDT has now been deployed across several layer 1 and layer 2 networks. Notably, the Tron Network is the largest host of USDT, supporting approximately 50% of the supply (51.05 billion USD at the time of writing).

Originally launched as RealCoin in July 2014 by Brock Pierce, Reeve Collins, and Craig Sellars, it was rebranded to Tether (USDT) in November of the same year. Cantor Fitzgerald, an American financial services company founded in 1945, has operated as Tether’s custodian for their treasury notes since late 2021.

Risks of USDT

Like an investment in other crypto assets, there are some general risks to investing in USDT. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in USDT is subject to the following specific risks:

• Although USDT provides monthly and historical attestations, there may be times when the USDT token experiences temporary deviations from its peg, particularly during periods of significant market volatility or challenges faced by the custody provider.
• The S&P Global has began publishing stablecoin ratings - within Tether’s assessment a number of weaknesses were pointed out, including:
  - Lack of information on custodians, counterparties, and bank account providers didn’t fair so well in part because of its lack of transparency.
  - Large share of USDT reserves compromise short-term U.S. treasury bills and otherr U.S dollar cash equivalents - assets that could be subject to credit, market, interest rate, or foreign currency risks.
  - Limited transparency on reserve management and risk appetite.
  - Lack of regulatory framework.
  - No asset segregation to protect against the issuer’s insolvency.
  - Limitations to USDT’s primary redeemability.
• Additionally, a U.S. accounting body has made proposals for reporting on stablecoin reserves which would involve identifying every asset issuer, custodian and the jurisdictions in which they are based, which may impact Tether as a function of, but not limited to, the weaknesses outlined above.

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with USDT. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The aforementioned founders and Tether are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of USDT have no recourse to founder, Tether, or Uphold if USDT declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing USDT on the Uphold Platform, Uphold performed due diligence on USDT and determined that USDT is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of USDT, including ensuring the source code is open-source, audited and peer reviewed, security and monthly attestations.
• The supply, demand, maturity, utility, and liquidity of USDT.
• Any marketing materials put forward by the USDT social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with USDT, including any code defects, security breaches and other threats concerning USDT and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with USDT, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of USDT.

General

Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Uphold users should read the Risks Specific To Holding Digital Assets statement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.  

Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following link. Please also review the Uphold Canada – Crypto Risk Statement for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and Risks Specific To Holding Digital Assets statement. 

Last updated on March 12, 2024.