This comes as the Evergrande debt crisis and rival stablecoins shine a spotlight on Tether's reserves again. "We are working with an amazing counterparty that is extremely professional and has a deep knowledge of traditional finance and also crypto markets and the blockchain industry and so on. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. But since it's unsecured, there is also very little recourse for investors if an issuer does default. First Mover The latest moves in crypto markets, in context. This license does not include nor permit your resale or commercial use of the Site or its contents. As we have indicated in our published statements and our most recent assurance attestation with a reporting date of June 30, 2021, the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. Tether's commercial paper disclosure places it among global giants read more. promo Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. You can subscribe to get the full newsletter here. different direction, choosing to only use cash reserves and cash equivalents, US Treasury is expected to release an in-depth report on stablecoins. Last March, the Federal Reserve stepped in to buy commercial paper as the pandemic led money market funds, one of the biggest buyers, to pull back. By signing up, you will receive emails about CoinDesk product updates, events and marketing and you agree to our, Bankman-Fried Should Have Only Flip Phone, Website Whitelist, DOJ Says, With Congress Impotent, Courts Are the Only Option for Fighting SEC Overreach, Silvergate Closes SEN Platform Institutions Used to Move Money to Crypto Exchanges, Binance.US Is Operating 'Unregistered Securities Exchange,' SEC Official Says. In fact, Tether claimed earlier in the year that 50% of its reserves come from commercial paper. Tether published its first Reserves Breakdown in March 2021. But this reported accumulation has largely gone unnoticed on Wall Street, according to several of the biggest players in the market including bank traders, analysts and money market funds. Earlier this year, Tether and Bitfinex settled one of those battles over its reserves with the New York state Attorney General. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Debate swirls about whether that impact would spread beyond China, but theres broad agreement that impact within the country would be near catastrophic. Tether, the largest stablecoin, is a Hong-Kong based stable currency. Analysis-Investors grappling with Evergrande fallout weigh risk of wider pain, This sprinting robot could become your next beach lifeguard, Domino effect as more EU institutions ban TikTok on work devices, TikTok is setting time-limits for teens. Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. Meanwhile, based on data from the Peoples Bank of China, Chinese commercial paper ended Q2 in 2021 at around $900 billion, up from just shy of $700 billion that same quarter in 2019, a gain of less than a third. The tumble appears to have been triggered by the mounting problems at embattled property giant China. Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.. analyse how our Sites are used. Markets cant function without transparent information flows, full stop. "Right now, owning crypto is what's known as a 'crowded' trade and I don't want you to lose money if this space keeps getting hit by Evergrande's contagion worries," he said. Tethers are today, and have always been, fully backed by assets sufficient to cover the amount of tethers in circulation, Hoegner said of its latest disclosure. Stay up to date with what you want to know. Tether still expects to be the first to secure an external financial statement audit, which it has been exploring since 2017, but it won't necessarily be from one of the Big Four accountants. Now onto the crypto context, if you have not guess it already, Tether's USDT that tracks the value of the US dollar is backed by a significant amount of Chinese commercial paper. Evergrande, for its part, is the largest commercial paper issuer in China's real estate market, owning some $32 billion worth of commercial paper at the end of last year. In response to the Bloomberg BW report, it released a blog post claiming that the report is spreading misinformation.. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, . Stablecoin Tether says holds no Evergrande commercial paper - Yahoo! Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. The stablecoin issuer says its goal is to reduce its commercial paper holdings to zero. madcap@cnbc.com. To counteract that line of questioning, Tether secured attestations on its financial statements - a review from an independent accountant, rather than a full audit - on the reserves. Tether, the world's largest 'stablecoin', said in a statement it does not hold any commercial paper or securities issued by embattled developer China Evergrande Group, as regulatory scrutiny into risks from this type of token grow. Evergrande has failed to execute on the promises backing its roughly $300 billion in debt, particularly in housing. The company has more than $300 billion in total liabilities and recently warned investors it may default on its debts. See here for a complete list of exchanges and delays. What should a secular society really look like? In November 2018, it had to transfer a substantial portion of its backing to Bitfinex after a loss of funds, meaning that it no longer met its claim of being fully backed by US dollars. Stablecoins are cryptocurrencies that are pegged to fiat currency on a one-to-one basis. Sign up for The Node, our daily newsletter bringing you the biggest crypto news and ideas. ; ; Vergleich; ; ; ; The most recent report from accountant Moore Cayman shows more than 50% of the assets backing a tether coin were commercial paper and certificates of deposit, rather than dollars, or short-term government paper. Tether says it doesn't hold any commercial paper issued by Evergrande China to order developers to disclose commercial paper debt - Reuters At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Since Tether doesnt disclose specifics about the commercial paper that substantially backs its stablecoin, this is a bit like serving a houseguest a sandwich and loudly assuring them that it is absolutely NOT made from diseased horsemeat. Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. In those two years, bitcoins market cap has gone up eight times, from $159 billion to $1.3 trillion. The developer on Thursday applied to suspend trading of that unit's onshore corporate bonds following a downgrade, which market participants said indicated an increasing likelihood of defaults and restructuring. News and analysis for the professional investor. "Tether has maintained its stability . CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. This article is excerpted from The Node, CoinDesks daily roundup of the most pivotal stories in blockchain and crypto news. Ardoino clarified that Tether does not hold Evergrande's commercial paper. Tether said that it funnelled roughly half its reserves into commercial paper. Consider this - most of the reserve assets Tether holds to support its USDT are commercial papers (CPs) and certificate of deposits (CDs) instead of the US dollar. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. Tethers defenders can say that even if one were to assume Tether spent half of every dollar it is said to have taken in over the past two years on commercial paper in China, that would be under one-fifth of new issuances and 4% of the market. He also shares his expectations on stablecoin regulation and competition. Tether's USDT remains the dominant stablecoin in the market despite the FUD surrounding the coin. The systematic suppression that characterizes Chinese markets adds an opaque but potentially huge risk for the holders of any Chinese asset even if that risk is wrapped up in a supposed stablecoin. ConsenSys to Launch zkEVM Testnet as Battle for ZK Supremacy Heats Up, Binance Continues to Battle FUD as US Senators Go After Balance Sheets, Coinbase Moves Into More Stable World of Asset Management with Latest Acquisition, EOS Pumps 10% Amid Broader Market Correction due to EVM Speculation. The downgrade from A to AA applies both to the bonds and their issuer rating. It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. And it could offer savvy investors the opportunity to hedge against the Tether Bomb an affectionate term for the fact that nobody really From 2018 onwards, new stablecoins have been pouring onto the markets. He said that the New York attorney-general had no clear findings that customers at any point were at risk of being unable to redeem tethers because of a lack of backing. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. HONGKONG Tether, the worlds largest stablecoin, said in a statement it does not hold any commercial paper or securities issued by embattled developer China Evergrande Group, as regulatory scrutiny into risks from this type of token grow. Tether's market capitalization surged 357% in the last year to around $69 billion. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. He also said that Tether did not hold any commercial paper issued by cryptocurrency exchanges or affiliated entities. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Tether, Bitcoin and Chinese Commercial Paper at Scale Webinars Indices Markets Finance Technology Web3 Policy Sponsored Content Upcoming event Yuga Labs, Google and More TV & Videos TV & Videos. The company also denied holding any Evergrande debt and claims to hold only commercial paper issued by A-2 and above-rated companies, which it claims to be risk-free. The New York attorney-generals office declined to comment on whether Tethers disclosure, which came in the form of a single-page PDF, was sufficient to meet its requirement on reporting as part of Februarys settlement. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. JPMorgans analysts said the large commercial paper holdings may suggest that Tether is struggling to find a bank willing to take its cash as a deposit. Regulators are starting to pay greater attention to stablecoins digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets and some observers have raised concerns about the tokens liquidity in a time of stress. Tether grants you a limited license to access and make personal use of the Site. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. You will receive a link to create a new password via email. 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