Reports: Puerto Rico-based Noble Bank serving as Tether cryptocurrency reserve
SAN JUAN – An investigation carried out by the Bitcoin Mercantile Exchange suggests that the local financial institution Noble Bank has become a cryptocurrency reserve center and created a relationship with startup Tether and its U.S.-dollar pegged currency, USDT.
The information was reported by cryptocurrency and blockchain news site CCN, and adds to mounting speculation about the possibility that Tether may be launching a cryptocurrency bank on the island.
On Monday, BitMEX (Bitcoin Mercantile Exchange) Research published a report examining newly released data related to Puerto Rico’s financial system for the calendar year ended 2017.
The data published by the Puerto Rico Financial Institutions Commissioner’s Office indicate that bank deposits by international finance entities (IFE) category jumped by 248 percent to $3.3 billion in the fourth quarter, while total assets for these grew by 161 percent. As BitMEX noted, the surge in deposits correlated with the cryptocurrency market’s dramatic upswell, and Tether’s market cap grew by 215 percent during the same period.
“Cash deposits as a percentage of total assets grew to 85.8 percent from 72.7 percent during the quarter, indicating a growth in full-reserve banking. Full-reserve banking is rare, and there are only two such banks in Puerto Rico that fall under the IFE category,” CCN wrote.
San Juan-based Noble Bank has “verified relationships” with cryptocurrency-related firms. Its founder and CEO, John Betts, has a previous professional relationship with Tether co-founder Brock Pierce.
Stateside media reports have questioned Tether’s solvency. Its creators say each token is backed by $1, and the tokens serve as a proxy for dollars on many cryptocurrency exchanges, but critics have alleged the token is not fully backed and is used to prop up the price of bitcoin.
Coinmarketcap.com says Tether is the second most liquid cryptocurrency, with a volume of $2.83 billion a day.