That's part of the issue I think. Crypto being unregulated, there isn't any specific amount that has to be held in cash. I think if I were Tether, I would be erring on the side of caution in my holdings. They are poised to be the peg for USD for long term. There's big money in that. If they tried to make money in the short term by risking backing funds in investments or by inflating beyond their holdings, they may have blown a huge opportunity.
I think when the dust settles, it will be clear that you need more than 10% in backing holdings. Crypto is volatile, and full of super low-fee day trading. I think that justifies having a peg with a more conservative backing strategy.
Appreciated reading your thoughts.
I partially disagree - the fact that crypto is unregulated isn't the main issue. Even if regulations existed saying that 1:1 ratio in cash needs to be held, Tether would simply operate in a jurisdiction that doesn't require it. regulations must be enforced, and therefore, can always be skirted.
the main issue is that Tether has claimed that they will maintain a 1:1 ratio. regulations or not, they've stated publicly that they will maintain this ratio, to ensure the peg remains.
if they decided to use the cash for something else to make profits in the meantime, that's misleading and dishonest.