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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#271

Post by logifail »

__turbobrew__ wrote: post #240
Geee wrote: post #180

Earlier quoted context omitted.

The problem is that it's not that simple to just park $80b on a bank account. The bank will use the money to buy bonds or give it out in mortgages to get interest on it. It's akin to kicking the can to the bank, and getting the money out might fail or be too slow. It's probably better to manage the reserve yourself, to be able to manage risk and liquidity properly, rather than outsource it to a bank.

It sounds like the only way to do this is to create your own bank which directly integrates with the federal reserve.

> It sounds like the only way to do this is to create your own bank which directly integrates with the federal reserve

...but isn't the whole point of Tether to stay as far away from the traditional banking system as they can?

This of course includes avoiding - as much as possible - all the KYC/AML legislation that traditional banks are obliged to follow?

Re: Tether Withdrawals Top $10B

#272

Post by datadata »

logifail wrote: post #267
datadata wrote: post #217

Earlier quoted context omitted.

> In theory, every single USDT in circulation could be redeemed at a moment's notice The easy way to protect against this is to not contractually promise instant redemption. I think this is what tether actually does, but I could not find a source. Regular savings account banks do typically do this, for example the bank has the right to ask for 7 days to honor a withdrawal. If you are tether and your asserts are in bo…

> Regular savings account banks do typically do this, for example the bank has the right to ask for 7 days to honor a withdrawal Source? I'm familiar with savings accounts described as "instant access" or "easy access" where you can get your money out whenever you feel like it. Unless the bank actually markets an account as a "notice account", can they really ask for 7 days notice?

Here is an example: https://www.capitalone.com/bank/disclosures/savings-accounts...

> Advance Notice of Withdrawal: Under federal law, we must reserve the right to require you to give us at least 7 days written notice before you take money out of your 360 Savings. (This hardly ever happens but legally we have to say it!)

Re: Tether Withdrawals Top $10B

#273

Post by X6S1x6Okd1st »

ceejayoz wrote: post #223
anm89 wrote: post #99

Earlier quoted context omitted.

And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact? I don't even disagree that there are potentially major issues here but stating this as a fact is just silly.

> And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact? That's not a safe bet. https://en.wikipedia.org/wiki/Michael_Burry , which the film "The Big Short" is based off, correctly predicted the 2007-2009 collapse of the housing market, but nearly lost everything waiting for it to occur . > During his paym…

borrow APY variable for USDT on aave on Ethereum is currently 3% apy.

If you can stomach the various risks involved (e.g. smart contract risk, exposure to ethereum 51% attack or something) then acquire any asset that AAVE has (e.g. USDC, Dai, ETH, BTC), deposit it, withdrawal USDT & sell the USDT thereby naked shorting USDT for 3% APY at current rates.

Those rates are low enough that it just doesn't seem like the market is that spooked yet.

Re: Tether Withdrawals Top $10B

#274

Post by klyrs »

swamp40 wrote: post #216
xwolfi wrote: post #196

Earlier quoted context omitted.

W...why do you want something more digital than the existing system ? I dont want each dollar to be tracked from its infancy to where I spent it, I m quite fine with withdrawing my digital money back to cash at the ATM and spending it anonymously thereafter. The system is perfect, why change it to liquefy the dumb investment a few crypto lunatics made ?

The existing system would stay the same. A USD stablecoin would be something new - a cryptocurrency that is backed 1:1 by the USD and the US Government. It's too big of a job for private finances and too prone to corruption because there is zero profit if you do it properly.

What value does "cryptocurrency" add to a centralized currency? I can see that we'd be better off with a standardized protocol for sending money around, but plenty of countries have done that fine. The US is stuck in a technological backwater, yes, but I fail to see why "cryptocurrency" would decrease the number of problems.

Re: Tether Withdrawals Top $10B

#275

Post by X6S1x6Okd1st »

alasdair_ wrote: post #133
anm89 wrote: post #99

Earlier quoted context omitted.

And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact? I don't even disagree that there are potentially major issues here but stating this as a fact is just silly.

I wonder how easy it is to actually short Tether assuming the likely scenario where USDT goes the way of UST and trading is effectively halted. How does one cover their short when no trading is possible? In a regular exchange, there are rules about how to handle this but I'm not clear how it happens with crypto.

UST trading only halted on some centralized exchanges. If you are willing to expose yourself to DeFi then trading continued.

You can short USDT on AAVE for 3% APY at current variable rates.

Re: Tether Withdrawals Top $10B

#276

Post by logifail »

cormacrelf wrote: post #158
TomSwirly wrote: post #101

Earlier quoted context omitted.

Your answer is not false, but does not explain why someone would hold Tether instead of using it as an intermediate vehicle.

The wisdom of holding is always relative to the rest of the market and what else you could be holding. Imagine a metals exchange. If copper were going up in value compared to the other metals, you’d want to hold copper. But you can also sell all your metals for cash. You would do this when all the metals are going down in value, which means USD is the “best-performing metal” and you want to be holding it. You always…

> If copper were going up in value compared to the other metals, you’d want to hold copper. But you can also sell all your metals for cash. You would do this when all the metals are going down in value, which means USD is the “best-performing metal” and you want to be holding it.

I'm not sure I follow that description, are you really saying one buys commodities when they're rising in price and sells when they're falling? You make it sound like there's a trend one can observe .. and predict the future?

Back to real life, take a look a the copper price chart zoomed out to one year[0] It's been going up - and also down - all the time.

I'm reminded of the proverb "Nobody rings a bell at the top or the bottom of a market"...

[0] https://www.bloomberg.com/quote/HG1:COM

Re: Tether Withdrawals Top $10B

#277

Post by eldenwrong »

pg_bot wrote: post #204
Havoc wrote: post #130

More importantly how is 70B still in it… Not opposed to crypto in general but tether always struck me as rather questionable even pre Luna Tera collapse

If you look at the timeline for tether it seems even more suspect. In late august of 2020 there are 10 billion tethers in circulation. They supposedly grew 8x in less than 2 years while being under investigation for bank fraud and a litany of other problems. They've never had an audit of their reserves, and the public behavior of their executives does not inspire confidence. Here's how this plays out in the next few…

How much liquidity entered the financial markets since 2020....?

Re: Tether Withdrawals Top $10B

#278

Post by WinstonSmith84 »

jcranmer wrote: post #256
shadedtriangle wrote: post #218

Earlier quoted context omitted.

> All you need for a stable stablecoin is to save every dollar put in to it. That’s the issue right there. How does Tether save its dollars? We can see it in their transparency report[1]. Whether you believe them or not it’s not just cash in a bank account. * 0.41% Non-U.S. Treasury Bills * 55.53% U.S. Treasury Bills * 0.15% Reverse Repurchase Agreements * 5.81% Cash & Bank Deposits * 9.63% Money Market Funds * 28.47…

> What if the value of those assets is already below 1:1 because of recent market events? The statistics you're bringing up are as of March 31. Do note that 6% of reserves are in "Other Investments (including digital tokens)", and Bitcoin (as a proxy for all cryptocurrencies) is down ~30% since then, so that's at least 2% of their assets that have been wiped out by market conditions. Keep in mind that said report als…

Tether, or rather Finex is a famous MM. Don't worry too much about their "other investments", they are up a lot no matter BTC price.

Tip of the iceberg https://bitinfocharts.com/bitcoin/wallet/Bitfinex-coldwallet

Also, you're going with the assumption they shall be able to redeem 100%. Crash happens, like we have seen, but everyone cashing out their USDT is not a scenario going to happen. Or if you want to account for this scenario, then you can as well assume that crypto is going to disappear, and that would not happen without a cataclysmic event in the stock market either. Probably we will be back to the stone age at this point, and will have other things to worry about

Re: Tether Withdrawals Top $10B

#280

Post by stavros »

throwaway6734 wrote: post #263
ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

What's stopping them from just printing tethers without dollar backing and injecting them into the market?

Tethers aren't dollar-backed, are they? You just create as many tethers as you want out of thin air, and you sell them for a dollar each. If people want to sell them back, you (presumably) have the dollars still.
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