2 mins read Cryptocurrency can be a punishing place for those who do not do their research or do not take the extra precautions to ensure they operate properly. Lost funds are a huge issue in the industry and many have been told their assets are gone forever. Tether, on the other hand, has worked with many users and projects to help recover lost tokens. Since its inception in 2014, Tether has recovered over $87m in lost tokens.
The idea of true decentralization means no one entity controls all digital assets and the user is the sole person responsible for custodial actions. While the news of Tether recovering tokens sounds positive, there is a bigger worry when it comes to the control Tether has over their tokens.
Tether has been well known for not being a decentralized organization. Its company controls all rights to create new tokens at its own will and has lacked transparency around the topic. Furthermore, Tether tokens include several functions that many projects avoid as much as possible.
The Tether smart contracts include abilities to allow its employees to freeze assets without approval. Normal smart contracts would require a user to approve a token usage but Tether has functions that override controls.
Tether has been able to recover lost tokens by using overarching control over its token supply. When Tether decides to act on stolen or lost tokens, it can quickly put a freeze on the tokens and create more to replace them. While this can sound like a good safety feature, many crypto enthusiasts worry about their ability to lock tokens that are assigned to user wallets.
Over the last few years, Tether has been put under legal pressure. The CFTC fines and multiple lawsuits have many crypto enthusiasts wondering about the future of cryptocurrency. There is a worry that if Tether gets shut down, what will they do with all the tokens?
A big government could force Tether to lock tokens that are assigned to certain users. This scenario is something that would never be possible with other tokens like Ethereum or Bitcoin, but with the control Tether’s contracts give them, it could happen. Governments could use Tether’s ability to target specific individuals or go after the entire supply all at once.
Many other stable coins on the market do not have this kind of control over tokens but the largest stable coins out there have this function. USDC has grown tremendously this year, overtaking the Tether supply, but also has the same issue with freezing tokens which they did in September 2020 at a request for law enforcement.
In the future, we hope that stable coins can have a decentralized autonomous organization that controls them and does not include freeze features or allow a single entity to create more tokens at their own free will.
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