<abstract xmlns="http://www.w3.org/1999/xhtml">
<p>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.</p>
</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.

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

Department of Economics, Catholic University of Ávila

DEKIS Research Group, Department of Economics, Catholic University of Ávila

Economics and Business Review

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"The asset-backing risk of stablecoin trading: The case of Tether"}

This article aims to analyse the asset-backing risk of stablecoins, focusing on international accounting standards, classification criteria, and auditing...

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

Published Online: Apr 10, 2024

Page range: 57 - 80

Received: Dec 23, 2022

Accepted: Mar 03, 2024

DOI: https://doi.org/10.18559/ebr.2024.1.1211

Keywords
stablecoins, auditing, IFRS, risk management, volatility, balance sheet

© 2024 Francisco Javier Jorcano Fernández et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

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

Published Online: Apr 10, 2024

Page range: 57 - 80

Received: Dec 23, 2022

Accepted: Mar 03, 2024

DOI: https://doi.org/10.18559/ebr.2024.1.1211

Keywordsstablecoins, auditing, IFRS, risk management, volatility, balance sheet

© 2024 Francisco Javier Jorcano Fernández et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
stablecoins, auditing, IFRS, risk management, volatility, balance sheet