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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...
USDC's "custody accounts" aren't cash either: "US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."
Earlier quoted context omitted.
> They are creating a dollar substitute and basically running a banking and payments business but without the oversight that anyone else doing a similar kind of business would have. You could take that word-for-word from the debate that raged after Treasury bailed out the prime funds in 2008.
Money market funds arguably act like a banking business, but are subject to regulation of their marketing material that obliges them to explain that they're not, and they certainly don't operate like a payments business. Money market deposit accounts are a different story, and are highly regulated (and secured). That being said, even if your comparison was accurate "hey, look at this similar business that caused harm…
This is an opinion piece and the headline & article are clickbait IMHO. From Tether's chart, they literally have 2.9% in cash. So I guess the headline technically checks out. But Tether reported over 75% held in cash equivalents, the same type of liquid assets Apple reports when reporters say Apple is sitting on billions in 'cash' I think maybe more interesting, Tether reports only 1.64% slice of pie has some crypto…
Earlier quoted context omitted.
USDC's "custody accounts" aren't cash either: "US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."
what defines an "approved investment" ?
> Circle may also invest these fiat funds in highly-liquid, AAA-rated fixed income securities.
I wrote about this here: https://omarabid.com/usd-stable-coins
Only Gemini USD is fully backed by US treasuries. Everyone else is using this money to play roulette.
The pitch is clearly a lie, but I'm also not too worried about them counting commercial paper and t-bills as "cash."
Commercial paper definitely shouldn't be classed as cash. They can have quite a lot of risk attached to them. The biggest problem with this whole thing is that Tether is essentially acting as a unregulated and unaudited bank. It has a whole bunch of depositors that have the right to demand their funds within 72 hours, meanwhile many of their assets cannot be converted into cash within that period. Tether is highly su…
That got me curious about what their rules actually are. From their terms of service [1]:
> Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves.
Also, US citizens aren’t allowed to use their service at all.
This seems sort of like an unregulated ETF that keeps all profits from investments for themselves. Easy money if you get it. If they don’t get too greedy it seems like they could keep it going indefinitely?
Why print money when a private company can just create its own? Just imagine what's going to happen when there's a bank run on Tether.
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??
Does it really matter when banks have a reserve requirement of 0% since 2 years?
Why print money when a private company can just create its own? Just imagine what's going to happen when there's a bank run on Tether.
Does it really matter when banks have a reserve requirement of 0% since 2 years?