Surprised Tether is willing to open it's mouth on this subject.
Glass houses...stones...
Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
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Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#22Earlier quoted context omitted.
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.
> Question -- why does this matter to me?
If you don't trade cryptocurrency and aren't invested in the market day to day, it very likely doesn't matter.
> As long as it facilitates short-term transactions and people are agreeable to trading it at 1 USD
Right now this is the case because the US AG announcements have not fundamentally changed the day to day use of the token, as you stated.
However, as the lawsuit moves forward, the probabilities of Bitfinex having to shut down due to bankruptcy or criminal liability, and the probability that the Tether blockchain has to be shut down, are going to change and may possibly increase.
The likelihood of these events occurring will cause the Tether premium to change accordingly, and as it increases, more and more market participants are going to cease to use it in favor of more reliable stablecoins.
The problem is that it's impossible to predict what the catalyst for these events will be, and it's up to individual traders to determine whether or not they think the day they're holding Tether is going to be the day something happens to cause the market to lose confidence in it.
Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#23Bitfinex money was on an account of a small Polish bank. It was confiscated by a US government when they chased Colombian drug cartels earlier in 2018. There was no proper segregation of client funds by their payment processor Crypto Capital Corp. Looks like Tether was collateral damage.
Polish source: https://zaufanatrzeciastrona.pl/post/gielda-bitfinex-zgubila... (please use Google translator)
Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#24[deleted]
Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#25[deleted]
Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#26Bitfinex money was on an account of a small Polish bank. It was confiscated by a US government when they chased Colombian drug cartels earlier in 2018. There was no proper segregation of client funds by their payment processor Crypto Capital Corp. Looks like Tether was collateral damage. Polish source: https://zaufanatrzeciastrona.pl/post/gielda-bitfinex-zgubila... (please use Google translator)
What would happen if the US Government stepped in and took over Tether? Would it be feasible for a different foreign government to do so?
Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#27Honestly, 74% is a much higher number than I was expecting.
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Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#28My bank only needs to keep 10% of its deposits backed by cash, securities. [0] [0] https://en.wikipedia.org/wiki/Reserve_requirement#United_Sta...
> My bank only needs to keep 10% of its deposits backed by cash, securities. True, but your FIAT is FDIC insured to an extend. Neither Tether nor any of these funny moneys are. Furthermore, I'm pretty sure non accredited banks cannot run fractional reserves legally.
Also, fractional reserves are fully backed by outstanding loans due for repayment, which is not the same as being backed by nothing. A decade ago, we saw how bad it was for the whole ecosystem when more loans than expected turned into nothing...
That's not at all similar to Bitfinex only pretending to back Tether.
Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#29Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities
#30Bitfinex money was on an account of a small Polish bank. It was confiscated by a US government when they chased Colombian drug cartels earlier in 2018. There was no proper segregation of client funds by their payment processor Crypto Capital Corp. Looks like Tether was collateral damage. Polish source: https://zaufanatrzeciastrona.pl/post/gielda-bitfinex-zgubila... (please use Google translator)
What would happen if the US Government stepped in and took over Tether? Would it be feasible for a different foreign government to do so?
What would they take over? Massive liabilities?