Mike Novogratz, a well-known bitcoin bull and the founder of Galaxy Digital, has recently stated he believes Tether, the issuer of the USDT stablecoin, wasn’t great when it comes to transparency and as such is to blame for its price’s woes.
According to Bloomberg, Novogratz’ comments came during a conference in Frankfurt, where he noted he thinks “Tether didn’t do a great job in terms of creating transparency,” and will now need some time to regain investors’ trust.
As covered, Tether’s USDT stablecoin saw its price drop earlier this month after it was revealed Noble Bank, a financial institution in Puerto Rico, was looking to sell itself after losing both Bitfinex and Tether as clients. Factoring in the risk, investors started dumping USDT tokens for other stablecoins and BTC, which led to major price movements.
USDT’s price kept dropping after Bitfinex – a popular exchange that shares management with Tether – suspended fiat deposits. While the firm later on launched a “new, improved” deposit system, investors were still cashing out, which ultimately saw the stablecoin’s market cap fall. At press time, one USDT is trading at $0.968.
Commenting on the situation Novogratz noted the “concept of stablecoins make[s] sense,” adding their transactional character is superior to that of other cryptocurrencies like bitcoin. He noted, however, he would prefer the Gemini Dollar (GUSD) over Tether because it’s more transparent, and presumably because it’s regulated by the New York State Department of Financial Services (NYDFS)
He further addressed criticism from renowned economist Nouriel Roubini, who last week told a US Senate committee cryptocurrencies are “the mother of all scams,” argued blockchain is “overhyped technology,” and that real fintech innovation is occurring without it.
Responding, Novogratz stated:
You can agree with Roubini on several points, but he is judging cryptocurrencies as if it was a PhD student. Cryptocurrencies are third- or fourth-graders, so still in need to mature.
A Growing Industry
The billionaire investor added that last year’s bubble in the crypto sector, which saw most cryptocurrencies hit new all-time highs, was created by retail investor speculating. Per Novogratz, current investments are going into blockchain infrastructure and crypto custodians, which will help the industry grow.
The founder of Galaxy Digital noted that while it “may take a few years,” bitcoin should soon start to be seen as “an asset class like gold or equities.” The recent launch of Fidelity Investments’ custody and brokerage platform is part of the ecosystem’s development, he said.
Custodians, the investor added, will grab a large part of the business credit card firms like Visa currently do, as crypto transaction costs are “much cheaper.” Novogratz has notably recently revealed he believes the beginning of 2019 will be big for bitcoin.
