Earlier quoted context omitted.
It's a pyramid scheme, Works until people start to pull out their money collectively
Insolvency is different from illiquidity.
You are assuming the paper backing the coin is proper
Tether reserves backed by 2.9% cash
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Re: Tether reserves backed by 2.9% cash
#92As 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...
One very interesting sentence in that document is the "100'000 USDC token blacklisted" If you ever thought govt-backed cryptos and centralized tokens like USDC were a good idea, ask yourself this: Could a stack of greenbacks ever be "blacklisted" (I mean, people have certainly tried with various "tricks")? One of the nice property of money as we've known it so far was fungibility. With govt-backed (e-dollar) and/or c…
> Could a stack of greenbacks ever be "blacklisted"
Deposit a whole stack from a bank robbery and find out.
Re: Tether reserves backed by 2.9% cash
#93the market does not seem to care. we are indeed living in a post-truth era.
The market creates the "truth".
Re: Tether reserves backed by 2.9% cash
#94Uh, this chart looks surprisingly good. Does it matter it tether is partially backed by "cash equivalents" such as t-bills? If those aren't good for cash, believe me, tether is the least of your worries. I'm more interested in the other 25%. Does anyone know what it is?
The level of detail they have given for "Commercial Paper" means that it is worthless. Commercial paper makes up about 50% of Tether's balance book.
It feels like people don't understand Tether. Tether was originally created to be an intermediary between exchanges and anyone that wanted to move large amounts of USD without paying price spreads to buy / sell on either end.
Tethers are essentially IOUs pegged to USD. While the Tether organization may have originally waited for the Tether purchaser to transfer the money into their accounts before issuing the Tether, by 2018 at the latest, this has to have changed when Tether was forced to cease dealing with US citizens. If not from the start, their model of trust must have allowed their large clients (the exchanges, etc.) to hold onto the USD and instead issue "Commerical Paper" to back the Tethers issued.
Tether obviously isn't going to reveal the exact arrangements here, and from the outset, their claims of having bank accounts with billions of dollars was suspect... but this revelation has been nothing new, and if anything, things look positive now. Tether doesn't appear to just be printing Tether with absolutely no backing.
Re: Tether reserves backed by 2.9% cash
#95This 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…
It’s not that long ago that Tether was claiming that all reserves were cash deposits. Now something like 75% of the reserves are loans to ... well, who knows? My guess is other crypto-companies, but it’s impossible to tell. (It’s also very weird to lump together “bonds” and “gold” in the same pot - these are completely different asset classes.) If one were of a cynical turn of mind (and who wouldn’t be, given Tether’…
I mean, this was exactly what Tether was made for. Moving large amounts of USD frictionlessly between exchanges without causing taxable events or losing money to spreads.
The top purchasers of USDT would be exchanges and "whales" (ranging from the extremely large crypto traders to the odd investment firms / hedge funds).
It wouldn't be surprising at all if the entities purchasing USDT are ultimately holding onto their USD but using the Tether issued to them and paying what essentially becomes just a transaction fee. As long as everyone can prove to Tether that they are good for what they purchase, the IOU trading scheme doesn't necessarily have to end in bloodshed / collapse either.
Re: Tether reserves backed by 2.9% cash
#96Earlier quoted context omitted.
Where did you get “72 hours” from? 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…
It's a pyramid scheme, Works until people start to pull out their money collectively
It's more like a bank without deposit insurance.
Re: Tether reserves backed by 2.9% cash
#97Earlier quoted context omitted.
It's a pyramid scheme, Works until people start to pull out their money collectively
Not quite a pyramid scheme. The basic scheme is: * Issue crypto pegged to the dollar * Hold interest-generating reserves * Collect interest I externalize risk, but it's a relatively low risk. That's different from a pyramid scheme. Low risk isn't the same as unimportant risk. The whole point of crypto is to mitigate very similar sorts of systemic risks. Cash works pretty well most of the time.
Sounds really close to a bank, without being one.
Re: Tether reserves backed by 2.9% cash
#981. Print fake money 2. Buy crypto with them and create a huge hype 3. Sell crypto for real money 4. Profit 5. Receive your Nobel prize in Economics
A bit like the stock markets right now.
Re: Tether reserves backed by 2.9% cash
#99Earlier quoted context omitted.
The level of detail they have given for "Commercial Paper" means that it is worthless. Commercial paper makes up about 50% of Tether's balance book.
It feels like people don't understand Tether. Tether was originally created to be an intermediary between exchanges and anyone that wanted to move large amounts of USD without paying price spreads to buy / sell on either end. Tethers are essentially IOUs pegged to USD. While the Tether organization may have originally waited for the Tether purchaser to transfer the money into their accounts before issuing the Tether,…
Wow, that is some serious rationalization right there.
Am I the only one remembering them claiming to be fully backed by USD in some bank accounts?
Re: Tether reserves backed by 2.9% cash
#100Earlier quoted context omitted.
Yeah, 100% agree. The notion of counter-party risk is understood by a tiny fraction of the folks who participate in finance.
At this kind of scale, I don't think there's such a thing as plain "cash" free of any counterparty risk - even just holding it in a bank account has risk attached (and most banks probably don't want an account with that much money in it because that would pose risks to them - they have the exact same problems finding somewhere to put it). US treasuries and AAA-rated bonds and commercial paper are about the best you c…
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?