We believe that this is the only way that these technologies are really created and can become mainstream.". Stablecoins are rarely on the tips of investors' tongues when it comes to talking about the volatility-filled headline-grabbing crypto market. The report investigated the quality of assets backing USDT, and alleged the debt assets supporting Tether dollar reserves may of questionable nature. Disclosures from cryptocurrency provider Tether suggest it has become one of the worlds largest investors in the US commercial paper market, rubbing shoulders with the likes of fund managers Vanguard and BlackRock and dwarfing the investments of tech giants like Google and Apple, according to estimates from JPMorgan. The US Treasury is expected to release an in-depth report on stablecoins any day now. At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". 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 . Something weird happened today in crypto-world. 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. Lab leak theory: 3 years on, will we ever know where COVID came from? Which countries in the EU are buying the most electric cars? Though its main product since its founding in the 1990s has been housing, Evergrande has grown into a huge conglomerate with products ranging from bottled water to electric cars to a soccer team. The biggest crypto news and ideas of the day. But he did lay out his timeline expectations for regulation. He takes the lead in the majority of the company's communications, while the CEO and CFO stay firmly in the background. Given Tethers record to this point, that may take a while. cookies 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. Get this delivered to your inbox, and more info about our products and services. Ardoino clarified that Tether does not hold Evergrande's commercial paper. All quotes delayed a minimum of 15 minutes. 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. 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 case is you have two choices, you trust the rating agencies, or you don't trust them. Sign up for free newsletters and get more CNBC delivered to your inbox. But tether's growth of around 3,350% since early 2019 is seen as reason to celebrate. 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. 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.. clarified that Tether does not hold Evergrande's commercial paper. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. Tether's USDT remains the dominant stablecoin in the market despite the FUD surrounding the coin. 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. Hit him up! An additional 20% reduction is to show up on the company's Q2 report. This license does not include nor permit your resale or commercial use of the Site or its contents. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. Evergrande has failed to execute on the promises backing its roughly $300 billion in debt, particularly in housing. Be a smarter, safer investor in eight weeks. 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. You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. Analysis-Investors grappling with Evergrande fallout weigh risk of wider pain, This sprinting robot could become your next beach lifeguard, Domino effect as more EU institutions ban TikTok on work devices, TikTok is setting time-limits for teens. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. 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. According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. Call Cramer: 1-800-743-CNBC, Want to take a deep dive into Cramer's world? According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. The biggest crypto news and ideas of the day. 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. Tether grants you a limited license to access and make personal use of the Site. What should a secular society really look like? His role is much broader than tech chief. 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. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. 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. 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. Just two years ago, USDTs market cap was a mere $4 billion. 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. var plc588602 = window.plc588602 || 0; CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. Cash made up only 2.9 per cent, according to the companys disclosure. A government bailout is also a possibility. 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. Tether is a typical design firm that will value the client's needs over their employees. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Tether grants you a limited license to access and make personal use of the Site. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. 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. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. The industry leader for online information for tax, accounting and finance professionals. 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. "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. 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. Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. Please enter your email address. Chinese real estate developers are some of the world's biggest issuers of commercial paper. 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. "In the end, this industry is more than $2 trillion and it's important to have clear guidelines and clear rules and so on. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. When Tether launched in 2014, it said every tether coin was fully backed by US dollars in bank accounts. And despite it seeming as though the stablecoins are in competition, Ardoino believes this will be key to success with regulators. Money Reimagined The transformation of value in the digital age. Stablecoin Tether clarified that while they do hold commercial paper, none of it is from Evergrande. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. The New York attorney-generals office declined to comment on whether Tethers disclosure, which came in the form of a single-page PDF, was sufficient to meet its requirement on reporting as part of Februarys settlement. 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. See here for a complete list of exchanges and delays. Sign up for The Node, our daily newsletter bringing you the biggest crypto news and ideas. 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. Data is a real-time snapshot *Data is delayed at least 15 minutes. The tumble appears to have been triggered by the mounting problems at embattled property giant China. 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. 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. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. Decentral Media, Inc. is not an investment advisor. As one of the first stablecoins, Tether's experienced its fair share of controversies, particularly surrounding the reserves that back its eponymous coin. Investors aren't only looking at audits, there's also regulation. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. 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. Which countries have banned TikTok, and why? CoinDesk journalists are not allowed to purchase stock outright in DCG. "Tether has maintained its stability . News and analysis for the professional investor. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. "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. Even the chance to speak to Ardoino is rare. 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. 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. What financial advisors need to know about crypto. 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 . 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. 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. It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. 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. 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. 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. Such holdings of companies short-term debt would make it the seventh largest in the world. Commercial paper is a form of unsecured, short-term debt issued by companies that doesn't need to be registered with the Securities and Exchange Commission (SEC) as long as it matures before nine months.