Tether Denies Holding Commercial Paper Issued by Troubled Real Estate Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. A commercial paper report from Evergrande at the end of 2021 showed its main unit had $32 billion, just around 10% of its total liabilities. "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so, the company said. "In the end, this industry is more than $2 trillion and it's important to have clear guidelines and clear rules and so on. Stablecoin Tether clarified that while they do hold commercial paper, none of it is from Evergrande. Tether has become one of the most important components of the cryptocurrency ecosystem, with more than 35bn tethers printed so far this year, more than double its supply in January. Such holdings of companies short-term debt would make it the seventh largest in the world. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. The US Office of the Comptroller of the Currency has released guidance saying that banks can take deposits from stablecoin issuers only if the coins are fully backed by reserves. 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Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. promo Tether to Cut Commercial Paper Holdings to Less Than $4 Billion analyse how our Sites are used. "So Tether is extremely glad that there is a USDC, that there is Paxos and all the other stablecoins, because that is how we become an industry.". 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. A Bloomberg report has claimed to have found that Tether holds billions of dollars worth of Chinese commercial paper. Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. A growing swarm of debris in space has led the U.S. government to attempt to set new space hygiene norms, while private companies are also investing in ways to tackle the messy orbital environment. In May, it provided a breakdown of these reserves, which Tether claims included just under $30bn in commercial paper, a short-dated investment similar to cash. 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. Your Use of the Site. Which countries have banned TikTok, and why? The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. madcap@cnbc.com. Tether said that it funnelled roughly half its reserves into commercial paper. Evergrande and China's Looming Risk to Tether - CoinDesk Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? But is it bad? This was later repaid by Bitfinex. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, about a month ago Bloomberg BusinessWeek reported Tether's holdings included "billions of. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. The report investigated the quality of assets backing USDT, and alleged the debt assets supporting Tether dollar reserves may of questionable nature. "While old information about Tether's reserves and so on is public, it keeps growing," Ardoino said. He holds Bitcoin, Ethereum, and small amounts of other crypto assets. According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. 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. Ardoino clarified that Tether does not hold Evergrande's commercial paper. First Mover The latest moves in crypto markets, in context. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. Stablecoins are rarely on the tips of investors' tongues when it comes to talking about the volatility-filled headline-grabbing crypto market. After a couple of decades of relative freedom for entrepreneurs (including, as mentioned, the apparent freedom to commit securities fraud), Chinese leadership under Xi Jinping has begun to aggressively intervene in markets. David Z. Morris is CoinDesk's Chief Insights Columnist. What financial advisors need to know about crypto. This comes as the Evergrande debt crisis and rival stablecoins shine a spotlight on Tether's reserves again. Sell some, stay long the rest, then let's wait and see if China changes its attitude toward an Evergrande bailout.". It is also alleged that Tether also owns commercial paper issued by Evergrande, China's second-largest real estate developer, which is itself experiencing a major liquidity crisis. Balancing Innovation and Regulation: Why a Risk-Based Approach to Crypto Could Benefit America, Crypto Price Predictions, March 2023: Altcoins Are About to Take a Wild Turn, Top 10 Telegram Channels for Crypto Signals in 2023, Binance Accused of Malpractices Similar to FTX, Navigating Crypto Taxes Made Easy & Cheap: Meet Cryptiony. 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. Critics say it's not enough. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. document.write(''); Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. You can subscribe to get the full newsletter here. About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. 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 vast majority of the commercial paper held by Tether is . Commercial paper typically has low default rates. "There is an entire world outside of the US," Ardoino said. Is Evergrande's Fall Influencing the Depeg Issue for Tether? 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. Weve got lots of inquiries and heard lots of discussion, but have not seen any active participation, said Deborah Cunningham at Federated Hermes.Until last week we hadnt really heard of them, said a trader at a large bank. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. A government bailout is also a possibility. Tether's Paolo Ardoino on Reserves, Regulation and Evergrande Over the past two years, yet another headwind has entered the China mix. Tether Reviews: What Is It Like to Work At Tether? | Glassdoor As one of the first stablecoins, Tether's experienced its fair share of controversies, particularly surrounding the reserves that back its eponymous coin. How much of it is Chinese or specifically from Evergrande is unclear. While Tether (the company) said back in September it doesnt hold Evergrande commercial paper, about a month ago Bloomberg BusinessWeek reported Tethers holdings included billions of dollars of short-term loans to large Chinese companies something money-market funds avoid.. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. The most recent attestation states the average credit rating of its commercial paper holdings is "A-1" - an investment grade based on the ratings scale of Moody's Investor Services, a ratings agency. Sign up for free newsletters and get more CNBC delivered to your inbox. 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. Cramer has a position in ether, which runs on the Ethereum blockchain. According to a spokesperson from Tether, Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so. Tether had stated since its launch in 2014 that its tokens were fully backed by US dollars in bank accounts, before pivoting in February 2019 to say that its reserves included traditional currency, cash equivalents and other assets and receivables. var rnd = window.rnd || Math.floor(Math.random()*10e6); 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 is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . That has included harshly curtailing apparently successful fintech firms like Ant Group and, most recently, instituting restrictions on video games, which cant be good for Tencent and other firms. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. Tether is a typical design firm that will value the client's needs over their employees. Tether Claims to Hold no Commercial Paper From Struggling Evergrande In total, Tether holds 52% US Treasury bonds, 37% commercial paper, with the remainder in cash and money market funds. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent in corporate bonds, funds and precious metals. It was news to us.. News and analysis for the professional investor. Stay up to date with what you want to know. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. Tether has revealed that its commercial paper holdings would be $3.5 billion by July 31. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, . "Tether said they have no Evergrande exposure," Cramer acknowledged. At the end of 2020, it had $32 billion worth of commercial paper. HONG KONG, Sept 16 (Reuters) - 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 (3333.HK), as regulatory scrutiny into risks from this type of token grow. NOW WATCH: WATCH: How any business can use live shopping to net thousands of dollars per stream, said every tether coin was fully backed by US dollars in bank accounts. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself. Evergrande has failed to execute on the promises backing its roughly $300 billion in debt, particularly in housing. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume. What financial advisors need to know about crypto. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Probing the intersection of crypto and government. 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. This stability means they offer an accessible - if boring - entry and exit point to the crypto world. But the firm has not clarified the exact details of its debtors. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. var abkw = window.abkw || ''; Evergrande, which has total liabilities of more than $300 billion, is also in the spotlight as it scrambles to raise funds, teetering between a messy meltdown with . Elon Musks Twitter is dying a slow and tedious death. The outlet estimated that the actual figure could be even higher, since it has other units, which also issue commercial paper. Chinas loose and reactive (at best) financial regulatory environment is one reason anxiety around Tether has largely centered on whether it holds Chinese commercial paper in general not just whether it holds Evergrandes. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. Markets cant function without transparent information flows, full stop. Just last month, Bitfinex, Tethers parent company, tried to block CoinDesk from accessing the specifics of its commercial paper holdings by filing a petition in New York Supreme Court. You will receive a link to create a new password via email. Find company research, competitor information, contact details & financial data for Tether, Inc. of Seattle, WA. Approximately half of Tethers $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. 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. Something weird happened today in crypto-world. Chinese real estate developers are some of the world's biggest issuers of commercial paper. Tether Denies Holding Commercial Paper Issued by Troubled - NXTmine Just two years ago, USDTs market cap was a mere $4 billion. read more. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities. Tether says it doesn't hold any commercial paper issued by Evergrande Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. 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. ; ; Vergleich; ; ; ; The tumble appears to have been triggered by the mounting problems at embattled property giant China.