FTX made bankruptcy history, but a Tether collapse would be so much worse

For more insights and key statistics on the biggest trends in today’s most disruptive industries, subscribe to our Chart of the Day newsletter.

The scale of FTX’s bankruptcy has placed it among the biggest bankruptcies in financial services history, where it sits fourth behind only WorldCom, Enron, and Lehman Brothers. However, there’s a chance of an even bigger disaster if Tether goes down.

Beyond the chart: Tether is the industry’s most widely used stablecoin, and as of the end of January, Tether’s growth reached its highest point since the collapse of FTX, according to Blockworks.

But it’s facing serious issues. In our “Fintech Trends to Watch for 2023” report, we predict more stablecoins will collapse this year, like Terra did in 2022. But if Tether collapses, it could bring down the entire economy.

Tether says over 58% of its reserves are held in US Treasury Bills, accounting for around $39.7 billion, per CNBC. If it turns out its reserves are overstated, Tether could experience a “run on the bank” event (where large numbers of users look to redeem their digital currency), which could create turmoil for traditional financial markets.

Tether has managed to recover twice despite big crypto crashes, showing its resilience, according to Forbes. But if it goes down, that may be the end of crypto as we know it, according to The New York Times.

More like this:

• The unusual crew behind Tether, crypto’s pre-eminent Stablecoin
• Crypto banks owe themselves money
• Fintech trends to watch for 2023
• A roundup of the top five crypto collapses of 2022
• Yesterday’s Chart of the Day: 10 fastest-growing digital ad markets