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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. First Mover The latest moves in crypto markets, in context. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. In total, Tether holds 52% US Treasury bonds, 37% commercial paper, with the remainder in cash and money market funds. 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. See here for a complete list of exchanges and delays. Your Use of the Site. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. As we have indicated in our published statements and in 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 . It earned this title after the Chinese government banned the company from issuing longer-term debt. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume. Evergrande has now had to suspend trading of. We use cookies to improve your experience. 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. 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, About half of Tethers roughly $75 billion in assets, Tether (the company) said back in September. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. var absrc = 'https://servedbyadbutler.com/adserve/;ID=177750;size=0x0;setID=588602;type=js;sw='+screen.width+';sh='+screen.height+';spr='+window.devicePixelRatio+';kw='+abkw+';pid='+pid588602+';place='+(plc588602++)+';rnd='+rnd+';click=CLICK_MACRO_PLACEHOLDER'; Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. This license does not include nor permit your resale or commercial use of the Site or its contents. 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 downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. However that's not stopped its popularity. 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. All Rights Reserved. Hundreds of customers have protested in front of the companys offices alleging mistreatment or fraud. Our Standards: The Thomson Reuters Trust Principles. 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. 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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. 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. As demand for tether grew, market participants started to question whether that was the case. "The case is you have two choices, you trust the rating agencies, or you don't trust them. 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. This was later repaid by Bitfinex. cookies Got a confidential news tip? and other data for a number of reasons, such as keeping FT Sites reliable and secure, Can it be liquidated to meet redemptions? Evergrande is just the latest major Chinese firm to have serious problems due to apparent fraud or mismanagement. The developer on Thursday applied to suspend trading of that units onshore corporate bonds following a downgrade, which market participants said indicated an increasing likelihood of defaults and restructuring. This is not the first time concerns about the true value of USDT have emerged. 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 . This stability means they offer an accessible - if boring - entry and exit point to the crypto world. "The problem with tether is that it's backed by various holdings and roughly half of those are commercial paper short-term loans and much of that is believed to be, but we don't know, Chinese commercial paper," Cramer said. About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers. 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. Holiday events will take place, but it is silently frowned upon to join in. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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. 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 . Tether has faced scrutiny from authorities and investigators in the past. Elon Musks Twitter is dying a slow and tedious death. Tether grants you a limited license to access and make personal use of the Site. 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. The latest moves in crypto markets, in context. Just two years ago, USDTs market cap was a mere $4 billion. A week after its stablecoin briefly lost its 1:1 peg with the U.S. Dollar, Tether's Q1 2022 assurance report shows it has reduced the commercial paper in its USDT reserves by 16.8%.. As of March 31, Tether 's $82 billion reserves were 86% cash and cash equivalents, the rest includes $4 billion in corporate bonds, $3 billion secured loans, and $5 billion other investments like cryptocurrencies . "Don't let it become a loss. The developer on Thursday applied to suspend trading of that unit's. The information on this website is subject to change without notice. There is a chance that were currently staring down the barrel of the next financial meltdown.. 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 US Treasury is expected to release an in-depth report on stablecoins any day now. 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. "An industry is not an industry if there is only one player, instead having many players with different offerings with different use cases is really helpful in a moment when you have to talk with the regulator," Ardoino said. Tether said that it funnelled roughly half its reserves into commercial paper. It is also alleged that Tether also owns commercial paper issued by Evergrande, Chinas second-largest real estate developer, which is itself experiencing a major liquidity crisis. Critics say it's not enough. Your weekly wrap of Web3 news and trends. Markets cant function without transparent information flows, full stop. read more. It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. "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.