> When thousands of people lose their retirements in a gigantic defi crash
Do we have any evidence this would happen? That ordinary people who didn't know they were investing in Tether would lose money in its collapse? (Honest question.)
Do we have any evidence this would happen? That ordinary people who didn't know they were investing in Tether would lose money in its collapse? (Honest question.)
I endlessly have to warn then to never hold tether. The problem is people don't understand what tether is, they assume it is just USD and use it because it is the most popular in many platforms or the outright default settings.
Tether crash will be very, very ugly when a lot of people leaving money on their "default" account realise the money all went poof.
IIRC, until recent demand triggered by use of tether in ethereum "defi" I believe the only US exchange which even had access to tether at all was Kraken and it didn't see much trade.
Basically the main reason for tether existing outside of acting as USD in bitfinex is for people to trade altcoins at sketchy offshore altcoin exchanges that have no access to actual USD by virtue of being sketchy and/or offshore. I believe there is essentially no reason for US residents to use these exchanges except for access to more obscure altcoins (as they require much smaller bribes to list things than larger exchanges).
It's extremely hard to estimate the aggregate impact because the very same exchanges that use tether as their primary/only form of "USD" are the ones which have volumes which are dubious (zero fee trading) to outright obviously fake (e.g. showing volume when the exchange is off the internet).
It's also hard to estimate the impact because its possible that as tether comes untethered people will trade out of it (e.g. into Bitcoin) thus driving _up_ the price of the things they're trading into.
(see the bitwise report to the SEC on fake exchange volume: https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca2... (they also wrote a paper on the subject, but a quick google isn't turning it up).