Is Noble Bank on the Brink of Insolvency and Will Tether Collapse With It?

Reports have emerged suggesting that Noble Bank International may be close to insolvent. If true, will it cause a Tether collapse?

Also see: WSJ Looks at Money Laundering in Crypto, ShapeShift CEO Pushes Back

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Whose Bank is That? It’s Tether’s, Baby. Who’s Tether? Tether’s Dead, Baby. Tether’s Dead.

Tether’s partner bank, Puerto Rico-based Noble Bank International, is rumored to be on the brink of collapse. With much of its funding coming by way of Tether, pressure on the controversial stablecoin may be placing the bank in financial peril. Bitfinex’ed appeared to have welcomed the implications, seeking the promised Noble audit:

The news comes amid announcements of new stablecoins with more transparent backing mechanisms emerging. Goldman Sachs-backed Circle announced late last month the long-awaited release of USDC, its native cryptocurrency pegged to the U.S. dollar.

That news came only weeks after the Winklevoss twins’ Gemini Trust Company launched their Gemini dollar, approved by the New York Department of Financial Services. The Gemini dollar–or the Winklevii Buck–is pegged on a 1:1 basis with the USD.

Late August, the launch of the Korea-based Terra stablecoin was announced, backed by powerful exchanges Binance, OKEx, and Huobi Capital, along with a network of e-commerce sites already boasting 40 million users. Binance also lists True USD.

Noble, But Not So Regal Anymore

Rumors surrounding Noble Bank’s pending solvency crisis remain unfounded. However, it is interesting to note that, as of press time, trading volumes of Tether are exceptionally high, slightly lower than those of bitcoin and around three times the volume of the next-most traded crypto, Ether.

Those volumes contrast markedly with the pattern whereby trading volume rankings tend to match closely with a crypto’s market cap: the bigger the market cap, the higher the trading volume. In Tether’s case over the past 24 hours, its volume position outranks its market cap position of eight markedly. More significantly, its volume surpasses its market cap, which is unheard of. (To put this into context, bitcoin’s 24-hour volume-to-cap ratio is around two percent.)

An Imminent Tether Collapse?

It is too early to call this the imminent collapse of USDT or Noble. But strange movements and strong rumors combined with new alternative stablecoins in which crypto traders can park their money with a greater sense of trust, would not appear to augur well for the controversial stablecoin many feel undermines the cryptoeconomy.

Have your say. If this is the end of Noble and a precursor of a possible Tether collapse, will you be disappointed? Surprised? Relieved?

Images via Pixabay

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