Tether Responds to Media FUD Regarding Rising Loan Risk

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On Dec. 1, the Wall Street Jour­nal pub­lished anoth­er attack on the cryp­to indus­try, tar­get­ing Teth­er this time.

The out­let claims that the com­pa­ny has “increas­ing­ly been lend­ing its own coins to cus­tomers rather than sell­ing them for hard cur­ren­cy upfront.”

It added that these loans add risk that the “com­pa­ny may not have enough liq­uid assets to pay redemp­tions in a crisis.”

The WSJ claims to have exam­ined Tether’s finan­cial reports, which evi­dence these loans. The most recent report sug­gests they reached $6.1 bil­lion as of Sept. 30, which equates to 9% of the company’s total assets.

Teth­er hit back with a blog post titled “WSJ & CO: The Hypocrisy of Main­stream Media, Asleep at the Wheel of Information.”

Tether Bites Back

The major­i­ty of the lengthy response was rant­i­ng at main­stream media for its fail­ure to pre­dict the demise of major cryp­to plat­forms and its repeat­ed tar­get­ing of Tether.

How­ev­er, it did not deny that these secured loans were real. The WSJ wrote that because Tether’s loans of USDT were denom­i­nat­ed in USDT, the com­pa­ny was exposed to a decline in the val­ue of the stablecoin.

Regard­ing those loans and the WSJ cov­er­age, the firm stated:

“This com­plete­ly miss­es the mark and mis­takes the USDT itself for the col­lat­er­al that under­pins it. Tether’s secured loans are extreme­ly over­col­lat­er­al­ized and even back­stopped by Tether’s addi­tion­al equi­ty if needed.”

The com­pa­ny added that the equi­ty was grow­ing quick­ly. Around 82.45% of total Teth­er reserves are in “U.S. Trea­suries and oth­er cash equiv­a­lents whose yields are at mul­ti-year highs,” it added.

Teth­er explained that its secured loans oper­ate sim­i­lar­ly to pri­vate banks lend­ing to cus­tomers using secured col­lat­er­al. It added that Teth­er always requires wide over-col­lat­er­al­iza­tion by extreme­ly liq­uid assets.

“While banks are gen­er­al­ly allowed to end up in a frac­tion­al reserve sce­nario, this is not the case for Teth­er. Teth­er col­lat­er­al size and qual­i­ty ensures that Teth­er back­ing remains above 100% at any time.”

In Novem­ber, Teth­er also refut­ed FUD regard­ing its issuance on the embat­tled Solana network.

Stablecoin Market Outlook

Teth­er is still the indus­try leader for sta­ble­coins, with a mar­ket share of 46% and a sup­ply of 65.6 bil­lion USDT.

The total cap­i­tal­iza­tion of all sta­ble­coins has fall­en to $142.6 bil­lion, which rep­re­sents around 16% of the total cryp­to mar­ket cap.

Circle’s USDC is the sec­ond largest sta­ble­coin, with a sup­ply of 43.2 bil­lion and a mar­ket share of 30%. Both Teth­er and Cir­cle have seen sup­plies decrease this year, while Binance has increased its issuance of BUSD, which cur­rent­ly has a sup­ply of 22.3 bil­lion coins.

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