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.. analyse how our Sites are used. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information. 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. But these are the same rating agencies that are rating the US Treasuries," Ardoino said. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As demand for tether grew, market participants started to question whether that was the case. Well, think of a detective in a movie who takes a corkboard, some photos and a lot of white strings to put all the parts of a story together. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. 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. Markets cant function without transparent information flows, full stop. Tether is the third-largest cryptocurrency by market value, trailing only ether and bitcoin, which are second and first, respectively. Ardoino wouldn't comment on whether the Treasury directly spoke to Tether for the report. I think one time, Stanley mentioned when he saw employees on downtime he . Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Thus, it has grown 19-fold in a matter of two dozen months. News and analysis for the professional investor. 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 . "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.". 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. In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. Evergrande is a major property developer in China, and beyond real estate, it has multiple other business units operating in industries such as health-care services and electric vehicles. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. Today, Bloomberg BusinessWeek reported that stablecoin issuer Tether owns billions of dollars worth of commercial paper issued by large Chinese firms and that it may be using these assets to back up its stablecoin reserves. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Tether has been beset by transparency concerns in the past as well. document.write(''); Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Stay up to date with what you want to know. The value of loans backing Tether's stablecoin reserves could be a risk factor for the crypto industry. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. 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. Sign up for The Node, our daily newsletter bringing you the biggest crypto news and ideas. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. Concerns intensified after Evergrande admitted in June it did not pay some commercial paper on time, and news in July a Chinese court froze a $20 million bank deposit held by the firm on the . About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. Find company research, competitor information, contact details & financial data for Tether, Inc. of Seattle, WA. This comes as the Evergrande debt crisis and rival stablecoins shine a spotlight on Tether's reserves again. He also shares his expectations on stablecoin regulation and competition. News and analysis for the professional investor. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Elon Musks Twitter is dying a slow and tedious death. var pid588602 = window.pid588602 || rnd; This is not the first time concerns about the true value of USDT have emerged. personalising content and ads, providing social media features and to Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Those questions can only be answered with a little more transparency from the stablecoins issuer. Tether has vehemently dismissed the claims and has stated it maintains the full value of the reserves backing its stablecoin supply. Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.". 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It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. Probing the intersection of crypto and government. Such holdings of companies short-term debt would make it the seventh largest in the world. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. 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. 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. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. For Ardoino and the team, this highlights the crypto community's faith in Tether. However that's not stopped its popularity. Reuters described Evergrande as "the biggest issuer of commercial papers". Cramer urges investors to take some crypto profits, citing Evergrande-related risks, struggling Chinese property developer Evergrande, stablecoin that's pegged to the U.S. dollar, third-largest cryptocurrency by market value. A Division of NBCUniversal. At the end of 2020, it had $32 billion worth of commercial paper. According to the attorney-generals investigation, there were instances when Tether was not fully backed in the past. Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. 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. 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. Siddharth Venkataramakrishnan and Joe Rennison. The stablecoin issuer says its goal is to reduce its commercial paper holdings to zero. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume. As part of that settlement, Tether received a $18.5 million fine, agreed to no longer operate in New York and pledged to provide quarterly reports on its reserves for the next two years. The tumble appears to have been triggered by the mounting problems at embattled property giant China. According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. Your Use of the Site. In those two years, bitcoins market cap has gone up eight times, from $159 billion to $1.3 trillion. Tether said that it funnelled roughly half its reserves into commercial paper. 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. "It's impossible to reach these levels of success in such a short time without genuine organic interest and really wide demand from the broader crypto trading industry," Paolo Ardoino, Tether's chief technology officer, told Insider in a recent interview. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. Get the latest business insights from Dun & Bradstreet. 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. 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. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. "In the end, this industry is more than $2 trillion and it's important to have clear guidelines and clear rules and so on. Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. Crypto markets took a dip Thursday just around the time it was reported that Chinas Evergrande Group was on the verge of defaulting on a bond payment. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. With Tether we are welcoming all that. A wave of smaller stock frauds from 2010-2016 were chronicled in the documentary The China Hustle, and Luckin Coffee put an exclamation point on the trend in 2019. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. What should a secular society really look like? 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. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, . He holds Bitcoin, Ethereum, and small amounts of other crypto assets. Even the chance to speak to Ardoino is rare. See here for a complete list of exchanges and delays. Debate swirls about whether that impact would spread beyond China, but theres broad agreement that impact within the country would be near catastrophic. Hundreds of customers have protested in front of the companys offices alleging mistreatment or fraud. While the embattled housing giant ultimately made its scheduled payment of $148 million, questions persist about the long-term prospects for it and other real estate developers in China. CNBC's Jim Cramer urged investors who have gains in their cryptocurrency portfolios to take some profits, saying Monday he believes digital currencies are likely to face more weakness related to struggling Chinese property developer Evergrande. Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. Which countries in the EU are buying the most electric cars? In fact, Tether, has been accused multiple times that their stablecoin is not backed by dollar reserves in the full amount of its market cap of $69 billion. But since it's unsecured, there is also very little recourse for investors if an issuer does default. In February, the operator and the related trading platform Bitfinex pledged to offer more transparency on its reserves under the terms of an $18.5m settlement with the New York attorney-generals office, leading to the most recent disclosures last month. 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. We believe that our disclosures thus far prove that all tethers are fully backed with very useful disclosures about the nature of that backing, he added. The downgrade from A to AA applies both to the bonds and their issuer rating. Tether is a typical design firm that will value the client's needs over their employees. According to Bloomberg BW, stablecoin issuer Tether has extended billions of dollars in loans to Chinese companies. Head to consensus.coindesk.com to register and buy your pass now. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. "Tether said they have no Evergrande exposure," Cramer acknowledged. Holiday events will take place, but it is silently frowned upon to join in. Bitcoin and other cryptocurrencies were crashing Monday amid a global selloff in risk assets. "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. All Rights Reserved. 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 far-reaching impacts, a managed collapse or a government bailout. 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. The latest moves in crypto markets, in context. 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. Decentral Media, Inc. is not an investment advisor. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. He takes the lead in the majority of the company's communications, while the CEO and CFO stay firmly in the background. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. recently accused of violating securities laws. "We are always working with regulators and we are expecting additional or proper regulations coming in the next few months, to one year," Ardoino said. Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. The developers debt is spread across an army of banks and other financial institutions, leading some analysts to worry that its collapse would have systemic impacts comparable to the fall of Lehman Brothers, which kicked off the Great Recession 13 years ago. 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. madcap@cnbc.com. 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. Tether's market capitalization surged 357% in the last year to around $69 billion. Evergrande has now had to suspend trading of. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. Tether has revealed that its commercial paper holdings would be $3.5 billion by July 31. In absolute terms, the sizes look something like this: A chart like the one above doesnt give a sense of the rate of growth for each, but this does: Bitcoin and USDT look somewhat related, but does one move as a function of the other? "The vast majority of the commercial paper held by Tether is . Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. Cramer said his crypto concerns right now begin with tether, a stablecoin that's pegged to the U.S. dollar. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. The stablecoin issuer Tether this week declared that it doesnt hold short-term debt issued by troubled Chinese real estate developer Evergrande. The. 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 far-reaching impacts, a managed collapse or a government bailout. It earned this title after the Chinese government banned the company from issuing longer-term debt. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. A government bailout is also a possibility. There is a chance that were currently staring down the barrel of the next financial meltdown.. Please enter your email address. read more. Can it be liquidated to meet redemptions? Probing the intersection of crypto and government. 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. Tether, the largest stablecoin, is a Hong-Kong based stable currency. Editing by Mark Potter, How China's new No.2 hastened the end of Xi's zero-COVID policy, Silvergate suspends crypto payments network; shares fall after-hours, Bank of Canada to hold rates steady at 4.50% through this year, Analysis: Sharp drop in equity premium may mark return of 60/40 portfolio, As space junk threat grows, government and investors seek solutions, Brazil's Petrobras faces legal risks after halting asset sales -lawyers, Nissan and Mexican workers agree to 9% raise at Morelos plant, union says, EIA blames crude oil blending, under-reported output for high adjustments in US data, American Airlines, flight attendants union seek mediation in contract negotiations, Exclusive news, data and analytics for financial market professionals. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). For critics of Tether, the new economy of digital assets is based on the worlds oldest profession: real estate speculation. This stability means they offer an accessible - if boring - entry and exit point to the crypto world. The information on this website is subject to change without notice. Kryptowhrungsunterricht/E-Book-Download. 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. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. 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. The US Treasury is expected to release an in-depth report on stablecoins any day now. The transformation of value in the digital age. Critics say it's not enough. Smart navigation app uses 3D sound to guide blind people. 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. Tether grants you a limited license to access and make personal use of the Site. Chinese real estate developers are some of the worlds biggest issuers of commercial paper. Overall, the studio has a watchful eye. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. 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. Tethers claims that its virtual currency was fully backed by US dollars at all times was a lie, said attorney-general Letitia James in February. Your Use of the Site. Crypto Long &. 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. This story was seen first on BeInCrypto Join our Telegram Group and get trading signals, a free trading course and more stories like this on BeInCrypto, Ukraine Latest: Russia Continues Efforts to Encircle Bakhmut, INSIGHT-Before fatal collapse, Turkish building had skirted code thanks to Erdogan policy, In Chicago, adapting electric buses to winters challenges, Ukraine ally Kallas fights for reelection in Estonia vote, Global race to boost electric vehicle range in cold weather.