Former head of Circle, Dan Matuszewski, went on a podcast called On the Brink with Castle Island to give his opinions and experiences minting the Tether stablecoin. Matuszewski firmly stated that there is nothing true about the allegations of Tether driving Bitcoin’s 2017 bull run.
“I say this as someone who created and redeemed billions of tether over the course of my life and specifically created it in 2017”
In 2017, there was price descrepancy between Bitcoin on Coinbase and on Bitfinex, which created arbitrage incentives. Matuszewski said he took advantage of this by minting Tether himself, but did not specify how he went about doing it.
“I can tell you that billions of dollars were sent in to make it like that”
Bitfinex had discounted Bitcoin compared to Coinbase, so people would sent in USD to Tether which was minted into USDT. Afterwards, they would transfer the Bitcoin to Coinbase and sell it for a profit. The reason this worked is because Coinbase was so popular, so the demand for Bitcoin was clearly there without the arbitrage incentives.
Matuszewski noted that a major difference between USDT and Circle’s USDC is that Tether is more willing to fight against regulatory scrutiny. From what Matuszewski said, something like USDC would have KYC (know your customer) restrictions on chain were USDT would not, and would fight against being force to implement them.
There is no easy access portal to submit USD in exchange for USDT, so the process would likely involve contacting Tether directly. It would be much easier for Tether to take USD from large net worth customers, mint a bunch of USDT and not involve proof of identity in the process than it would be for them to make a widely accessible web portal.
Tether is still popular in markets like Asia, because USD-BTC is a popular trading pair and USDT is harder to trace than things like the Renmimbi. Emily Parker, cofounder of Longhash mentioned on the Unchained podcast with Laura Shin that before people in China buy Bitcoin, they usually exchange their cash for USDT.