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Tether reserves backed by 2.9% cash

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Re: Tether reserves backed by 2.9% cash

#161

Post by ryanlol »

dkarras wrote: post #159
ryanlol wrote: post #146

Earlier quoted context omitted.

Not exactly, Tether has more credibility than your napkin given that they’re successfully maintaining the USDT peg despite huge volumes (for now)

Following that logic, any obvious ponzi / pyramid scheme is credible and trustworthy until it demonstrably collapses? You say tether is "maintaining" the peg but that information comes... from them. They are not audited. They are unregulated. You don't even know who is behind it. You won't see that they are not even close to solvent until a bank run occurs. It is easy to suspend disbelief as long as nobody requests t…

> Following that logic, any obvious ponzi / pyramid scheme is credible and trustworthy until it demonstrably collapses?

Credible and trustworthy? Of course not! Slightly more credible than a napkin with “100% cash” written on it? Of course.

> You say tether is "maintaining" the peg but that information comes... from them

That information comes from the exchanges where tether is traded.

>You won't see that they are not even close to solvent until a bank run occurs

Nobody is disputing this

Re: Tether reserves backed by 2.9% cash

#162

Post by AbortedLaunch »

ur-whale wrote: post #104
mike_d wrote: post #68

Earlier quoted context omitted.

> Could a stack of greenbacks ever be "blacklisted" Yes. Bill counters at banks capture serial numbers and associate them with your account when you make a cash deposit. Each night the serials are sent to a MCP database where they are checked against a hotlist entered by law enforcement across the country. The bank won't reject the bills on the spot, but depositing too many of the wrong ones will earn you a visit.

True, but you can still spend them at the grocery store. Tracing cash bills is a complicated affair beyond a couple of transactional hops.

The kidnapper/murderer Ferdi Elsas was found via bills spent at the grocery store.

Re: Tether reserves backed by 2.9% cash

#163

Post by joering2 »

whywhywhywhy wrote: post #113
joering2 wrote: post #6

Earlier quoted context omitted.

Its unbelievable that someone stoles a $20,000 car and do 15 behind bars, yet here we have folks that embazzled $850,000,000 and AG will sit down with them to kibdly negotiate a plea deal and penalize them 4% of what they stole. I mean seriously what the hell happened to Lady Justice??

Stealing a car is an act of aggression against an individual. Crimes are not simply about the monetary damages.

But wouldn't you argue that a guy who stole a car and was peacefully caught with no damage to car, people or property, caused less damage than what $850,000,000 stolen from gullible investors did? I mean - wouldn't that turn off victims from ever entering any stock market, be it NASDAQ or even their 401k found, causing more damage to the US financial ecosystem?

Re: Tether reserves backed by 2.9% cash

#164

Post by H8crilA »

ur-whale wrote: post #102
H8crilA wrote: post #100

Earlier quoted context omitted.

Short dated treasuries are practically indistinguishable from "cash". They're counted together on corporate balance sheets. Also, what do you mean "cash"? Printed bills? Deposits in commercial banks' checking accounts? Would savings accounts count too (they can be frozen for some amount of days)? Deposits in Fed accounts?

You're right. These days, the word "cash" is basically meaningless for anything bigger than buying a bagful of groceries at the store. And it's not going to get any better. What sad times we live in.

Nothing has changed for many decades, actually. For much longer than I'm alive, for instance. There's nothing new in money classification, currently.

Re: Tether reserves backed by 2.9% cash

#165

Post by DebtDeflation »

tambourineman88 wrote: post #136
Clewza313 wrote: post #106

Earlier quoted context omitted.

Tether released a statement of assets . They said nothing at all about liabilities.

No idea if this is worth the paper it is written on but Stuart Hoegner posted this on Twitter: https://tether.to/wp-content/uploads/2021/04/tether-assuranc...

>"Our opinion is limited solely to the CRR and the corresponding consolidated total assets and consolidated total liabilities as of 31 March 2021"

IOW, "They have the total amount of CP, loans, and bonds they say they have. Whether or not the issuers of those IOUs is Bitfinex or some shell company connected to the owners of Tether we have no opinion on"

Re: Tether reserves backed by 2.9% cash

#166

Post by meltedcapacitor »

seanhunter wrote: post #134

If you wanted to operate a fully legitimate tethered cryptocurrency, you have to do two things. Firstly you have to make public the basket of holdings backing the currency and secondly you have to bake in an arbitrage mechachanism to ensure the price of the basket and the price of teh currency don't drift too much. The way this works for the most obvious analogous product I can think of in the financial markets (inde…

The arb without transparency can work as well, as long as you keep enough collateral. At some point the peg becomes a self perpetuating prophecy. Carefully executed, it can last forever.

It could be what Tether does: they lost banking access early on and since then all new USDT seem to "appear" rather than being given to people wiring them dollars on the clear banking system, presumably from arb bots trading crypto vs USDT on the big exchanges to maintain the peg.

As long as they don't lose what the bots bought and the value of that basket is above cost basis (or fully hedged) it's unsinkable.

Re: Tether reserves backed by 2.9% cash

#167

Post by JudgePenitent »

seanhunter wrote: post #134

If you wanted to operate a fully legitimate tethered cryptocurrency, you have to do two things. Firstly you have to make public the basket of holdings backing the currency and secondly you have to bake in an arbitrage mechachanism to ensure the price of the basket and the price of teh currency don't drift too much. The way this works for the most obvious analogous product I can think of in the financial markets (inde…

Like Diem?

"In September 2019, Facebook announced that the reserve basket would be made up of: 50% United States dollar, 18% Euro, 14% Japanese yen, 11% Pound sterling and 7% Singapore dollar." [0]

Diem has, at this stage, halted tethering like this. They have since retreated physically (to the US) and ideologically (backing 100% by USD instead of a basket).

It is my understanding that they intended to operate Diem as you mentioned in your second point.

The primary issue with doing this is that, if its successful, and you have indeed created a more stable currency system (which is the intention of tethering/stablecoins in the first place), you will eventually be the mass currency, which will kill demand for nation state currencies (at least the ones not in the basket) outside of taxes.

This is why the Diem plan was shot down by global (banking) regulators, and also why stablecoins/tethering have never really operated outside of the digital realm (and to be frank, have merely serviced the pump and dump that is crypto today).

I 100% agree that the public record of these currencies has to be very clear and built into the process. Tether has repeatedly been misleading (weren't they originally 1:1 USD:Tether?) and even still, with these reports its hard to tell how the money is truly organized.

0: https://en.wikipedia.org/wiki/Diem_(digital_currency)#Curren...

Re: Tether reserves backed by 2.9% cash

#168

Post by JudgePenitent »

35fbe7d3d5b9 wrote: post #139
seanhunter wrote: post #134

If you wanted to operate a fully legitimate tethered cryptocurrency, you have to do two things. Firstly you have to make public the basket of holdings backing the currency and secondly you have to bake in an arbitrage mechachanism to ensure the price of the basket and the price of teh currency don't drift too much. The way this works for the most obvious analogous product I can think of in the financial markets (inde…

> It's incredibly important for this mechanism (and the public record of assets in the basket it relies on) to be built in to the process if the price is to be truly tethered. Otherwise the tether is just an illusion and in the ETF world, ETFs which didn't have this type of mechanism went completely haywire and became defunct. This is what's so surprising to me. Markets are efficient and rational, right? (;-)) Well,…

> or that USDT:USD has never been priced based on fundamentals.

Ding Ding Ding! We have a winner!

Re: Tether reserves backed by 2.9% cash

#170

Post by dan-robertson »

beefield wrote: post #48
sickmate wrote: post #15

As a comparison, USDC reserves are 100% backed by US dollars held in custody accounts, currently 9.3B. https://www.centre.io/hubfs/pdfs/attestation/grant-thorton_c...

Out of curiosity, in the hypotethical future case where the custody accounts would start to "pay" negative interest, what would happen to USDC? To me, there are only a limited set of options: 1. the peg fails 2. the custody accounts are switched to riskier assets - with or without knowledge of USDC holders. This, of course, has implications to the "stablecoin" status. One could even argue that USDC becomes a de facto…

What would happen if the bank accounts paid interest and the trust wanted to share some of that interest with holders? I think the answer would either be some complicated stock-split-like mechanism, or just have, say, USDC-fixed as the “true” coin and USDC quoted at a floating value to the former such that e.g. 1 USDC-fixed = 1.01 USDC, and creations/redemptions of USDC-fixed happen at $1.01 to capture a compounded interest of 1%
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