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Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

bloomberg.com

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Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#11

Post by dheera »

jpatokal wrote: post #5

Yet the Tether price of BTC is only 6% below the USD price: http://www.untether.space/

Question -- why does this matter to me? As long as the market agrees to trade it for around 1.00 USD, +/- a few %, which seems to generally be happening, it shouldn't matter to me whether it's backed or not. It's just an abstract notion that the market has agreed to trade at a certain price.

(It's not like I would hold onto USDT for a long time anyway -- it's only there to facilitate short-term needs. If I wanted to hold USD I'd just change it for USD and hold that instead.)

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#12

Post by bhouston »

dheera wrote: post #11
jpatokal wrote: post #5

Yet the Tether price of BTC is only 6% below the USD price: http://www.untether.space/

Question -- why does this matter to me? As long as the market agrees to trade it for around 1.00 USD, +/- a few %, which seems to generally be happening, it shouldn't matter to me whether it's backed or not. It's just an abstract notion that the market has agreed to trade at a certain price. (It's not like I would hold onto USDT for a long time anyway -- it's only there to facilitate short-term needs. If I wanted to…

Is the gap between issues tethers and backing USD widening? At what rate?

At some point people will not believing USDT is pegged to the dollar and it will be a race to the exit.

It is a matter of time I would think.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#13

Post by astrodust »

mikeyouse wrote: post #3
eindiran wrote: post #2

Honestly, 74% is a much higher number than I was expecting.

Conveniently enough, it works out that they're about $740 million short of their obligations. That's a lot of money.

Maybe Deutsche Bank will step up and loan them some money since clearly nothing shady is going on.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#15

Post by dheera »

bhouston wrote: post #12
dheera wrote: post #11

Earlier quoted context omitted.

Question -- why does this matter to me? As long as the market agrees to trade it for around 1.00 USD, +/- a few %, which seems to generally be happening, it shouldn't matter to me whether it's backed or not. It's just an abstract notion that the market has agreed to trade at a certain price. (It's not like I would hold onto USDT for a long time anyway -- it's only there to facilitate short-term needs. If I wanted to…

Is the gap between issues tethers and backing USD widening? At what rate? At some point people will not believing USDT is pegged to the dollar and it will be a race to the exit. It is a matter of time I would think.

Sure, but nobody would hold onto USDT for a long time anyway. It's not meant to be a long-term investment.

As long as it facilitates short-term transactions and people are agreeable to trading it at 1 USD, that black box system fulfills its mission as a product, and doesn't need to fulfill anything else.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#20

Post by cremp »

bhouston wrote: post #7
chatmasta wrote: post #4

My bank only needs to keep 10% of its deposits backed by cash, securities. [0] [0] https://en.wikipedia.org/wiki/Reserve_requirement#United_Sta...

You are misunderstanding fractional reserve banking. Fractional reserve banking means that the bank only has to keep enough cash on hand to meet their expected reasonable obligations. Banks still need their books to balance. That means that their liabilities can not exceed their assets. A bank can be solvent on paper but if there was a rush to withdraw by their customers, they may not be able to pay cash for all with…

Because Tether is the de-facto way for the exchanges to bypass USD regulations.
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