Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. But since it's unsecured, there is also very little recourse for investors if an issuer does default. 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. CoinDesk journalists are not allowed to purchase stock outright in DCG. 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. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, . Yet, does Tether truly own a lot of Chinese commercial paper? 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There is a chance that were currently staring down the barrel of the next financial meltdown.. Even the chance to speak to Ardoino is rare. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. "In the end, this industry is more than $2 trillion and it's important to have clear guidelines and clear rules and so on. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. Approximately half of Tether's $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. An additional 20% reduction is to show up on the company's Q2 report. But Stuart Hoegner, Tethers general counsel, said: With respect to reputation, we believe we are seeing the opposite: more and more counterparties are comfortable with Tether and our transparency initiatives and are keen to work with us.. 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. Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. This license does not include nor permit your resale or commercial use of the Site or its contents. Got a confidential news tip? Tether, Inc. Company Profile | Seattle, WA - Dun & Bradstreet That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. But he did lay out his timeline expectations for regulation. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume. Those questions can only be answered with a little more transparency from the stablecoins issuer. USDT leads the stablecoin market by trading volume and acts as the top base-pair currency for trading across several large crypto exchanges, including Binance, FTX, and others. He also shares his expectations on stablecoin regulation and competition. 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. According to Reuters, around 50% of Tethers $62.8 billion in held assets at the beginning of July 2021, was backed by commercial paper and certificates of deposit. 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. The downgrade from A to AA applies both to the bonds and their issuer rating. The transformation of value in the digital age. 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. New Tether Report Shows 17% Reduction in Commercial Paper 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. 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 . About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. 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. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. "I think that it's a little bit aggressive, or cocky, to ask that everyone in the world use US agencies, or US auditing companies - otherwise it does not matter, or is not fine," he said. Its been going on for a long time one analyst who warned about Evergrandes practices as early as 2012 was temporarily banned from Hong Kong markets by regulators for his reckless claims. Stablecoin Tether says holds no Evergrande 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. Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. Tether said that it funnelled roughly half its reserves into commercial paper. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. Find company research, competitor information, contact details & financial data for Tether, Inc. of Seattle, WA. But these are the same rating agencies that are rating the US Treasuries," Ardoino said. "I know the crypto-lovers never want to hear me say sell, but if you've got a big gain as I did, well, I'm begging you to," the "Mad Money" host said. The industry leader for online information for tax, accounting and finance professionals. The information on this website is subject to change without notice. However that's not stopped its popularity. In a series of tweets about the Evergrande news, partner at Cinnemhian Ventures Adam Cochran, said that IF either Tether or USDC did meltdown in a global collapse though, itd actually be bullish for crypto, as if you couldnt use them to cash out, people would just start bulk converting them into BTC/ETH regardless of price., Cochran added that, despite not being a well-known name in the West, the failure of Evergrande could have massive fallout. According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. This stability means they offer an accessible - if boring - entry and exit point to the crypto world. Tether Owns Billions In Chinese Debt: Bloomberg Report According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. A government bailout is also a possibility. Crypto investors need to be alert while the Evergrande situation unfolds even if they don't personally own tether because the stablecoin is used to purchase bitcoin and ether, Cramer said. Chinese real estate developers are some of the worlds biggest issuers of commercial paper. Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. Sign up for free newsletters and get more CNBC delivered to your inbox. Probing the intersection of crypto and government. Critics say it's not enough. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. "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. Approximately half of Tether's $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. var rnd = window.rnd || Math.floor(Math.random()*10e6); HONG KONG (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, as regulatory scrutiny into risks from this type of token grow. As demand for tether grew, market participants started to question whether that was the case. 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. Tether's commercial paper disclosure places it among global giants Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. As a result, even though Tether says it doesn't hold commercial paper issued by Evergrande, an upheaval in the commercial paper market could still have wider . Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. clarified that Tether does not hold Evergrande's commercial paper. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. David Z. Morris is CoinDesk's Chief Insights Columnist. analyse how our Sites are used. read more. Debate swirls about whether that impact would spread beyond China, but theres broad agreement that impact within the country would be near catastrophic. Get this delivered to your inbox, and more info about our products and services. Cramer stressed he still sees potential for cryptocurrencies to go "mainstream," but believes it's important to lock in at least some gains while they're still there. Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. Stablecoins are cryptocurrencies that are pegged to fiat currency on a one-to-one basis. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.". China Evergrande Group Flashes Default Warnings, Tether Says We Don't News and analysis for the professional investor. The value of loans backing Tether's stablecoin reserves could be a risk factor for the crypto industry. Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. "If tether collapsed, well, then it's going to gut the whole crypto ecosystem," he said. Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans! cookies 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.. See here for a complete list of exchanges and delays. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. No, I think this theory is baloney. However, as Tethers reserve holdings have been questioned by regulators such as the New York attorney-general in the past, providing banking services to Tether will likely raise reputational risk concerns, wrote the JPMorgan analysts. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. Evergrande and China's Looming Risk to Tether - CoinDesk