The asset-backing risk of stablecoin trading: The case of Tether

Fernández Francisco Javier Jorcano (), Fernández Miguel Ángel Echarte () and Alonso Sergio Luis Náñez ()
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Fernández Francisco Javier Jorcano: The Startup CFO. C. Orense, 12, 1º-4, 28020, Madrid, Spain
Fernández Miguel Ángel Echarte: DEKIS Research Group, Department of Economics, Catholic University of Ávila, C. Canteros S/N, 05005, Avila, Spain
Alonso Sergio Luis Náñez: DEKIS Research Group, Department of Economics, Catholic University of Ávila, C. Canteros S/N, 05005, Avila, Spain

Economics and Business Review, 2024, vol. 10, issue 1, 57-80

Abstract: This article aims to analyse the asset-backing risk of stablecoins, focusing on international accounting standards, classification criteria, and auditing standards and using Tether as a case study. It examines Tether’s issuance, backing, controls, ratios, and regulations to assess risk transmission and mitigation. The results suggest a need for unified and strengthened accounting and auditing standards to enhance user confidence. Liquidity, solvency, and debt ratios were applied to Tether’s balance sheets; while Tether has made efforts to increase its transparency, and although it possesses highly liquid assets, challenges remain regarding its liquidity, solvency, and debt. An independent auditors’ valuation is crucial for investor confidence, demonstrating that more specific regulations are required for stablecoins. Future research should explore other stablecoins to comprehensively understand the accounting and auditing challenges in the field.

Keywords: stablecoins; auditing; IFRS; risk management; volatility; balance sheet (search for similar items in EconPapers)
JEL-codes: G15 M21 M41 M42 M48 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecobur:v:10:y:2024:i:1:p:57-80:n:7

DOI: 10.18559/ebr.2024.1.1211

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