A co-founder of Tether, the $41 billion company behind the tether stablecoin, said the company and its reserves should be audited at least quarterly, and maybe even monthly.
"Every time you print a tether, you should have a dollar being added to that cash pool," said William Quigley, who left the project in 2015 and now runs the non-fungible token (NFT) exchange WAX. "Audited once a month, once a quarter."
The comments on CoinDesk TV come after Tether last month agreed to a $18.5 million settlement with the New York Attorney General on charges of an alleged attempt to hide financial losses. The company admitted to no wrongdoing while agreeing to provide quarterly reports on the composition of its reserves.
Tether's dollar-linked stablecoin, USDT, has become a key form of liquidity in cryptocurrency markets – transferred between exchanges and wallet addresses to purchase bitcoin and other digital tokens. In February, analysts with JPMorgan Chase, the largest U.S. bank, said a loss of faith in tether might pose systemic risks to the bitcoin market.
Quigley suggested Tether avoid mixing operational cash with custodial cash. "I don't understand why they made it so difficult," he said. "They're their own worst enemy."
It's not just the issue of trust standing in the way of tether's growth. Eventually, the issuance of digital currency by governments could supplant tether, according to Quigley.
"It would be easier for banks and financial institutions to hold something issued by government versus something held by a private company," Quigley said. "How hard is it to get an audit done?"
In response, Stuart Hoegner, Tether's general counsel, told CoinDesk in a comment emailed by a press representative: "Tether is taking steps towards increased transparency and plans to make announcements on this in due course."
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