Does it even need that? ETFs can keep their price stable with as few as five or ten entities being allowed to trade the underlying basket of assets for the ETF. Those who aren't allowed to directly exchange the assets for the ETF can instead trade with those who are allowed, or trade with someone who can trade with them. There's no need for everyone to be able to deal directly with the ETF issuer, and the same should apply to USDT.
> There's no need for everyone to be able to deal directly with the ETF issuer
But there is the need for everyone to trust the ETF manager. Authorised participants (APs) must trust they can redeem ETF units for a basket of the underlying shares and vice versa. Other market participants, in turn, must trust that process to manage tracking risk.
ETF managers earn that trust by contractually guaranteeing APs' creation/redemption rights, being regularly audited like normal companies, being regulated like securities companies, and having their holdings vouched for by other market participants, e.g. banks, clearing and settlement services, et cetera. Literally none of the preceding apply to Bitfinex nor Tether.
More broadly, a structure like Tether is inherently incompatible with anti-money laundering. No jurisdiction will let a bank say "these $2 billion are held by unknown beneficial owners." If we wanted that, we'd just re-authorise numbered, i.e. anonymous, bank accounts.
Thinking outside the box here -- why not just set up a bank? It might not be easy, but given the amount of capital floating around in crypto land, I assume it should be a non issue.
It's very hard to get regulatory approval for a banking charter right now. The FDIC has been approving less than 1 new bank a year since 2009, as compared to an average of 154 a year in the eight years prior to 2009[1]. And that's just one of several regulatory bodies that would need to approve a crypto bank.
There might be shell companies with a remaining active banking license, that were approved pre-2008? Seems like regulators are preferring that you acquire a charter over acquiring a new license.
Commodity ETFs get by with having audited assets stored somewhere in the vault (GLD). They just need to be periodically audited by a trusted third party (or two).
