For Ardoino and the team, this highlights the crypto community's faith in Tether. Probing the intersection of crypto and government. 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. 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. When Tether launched in 2014, it said every tether coin was fully backed by US dollars in bank accounts. No, I think this theory is baloney. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. 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. 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. Regardless of what commercial paper you hold, bonds and commercial paper would take a hit and some issuers may even fold," tweeted Adam Cochran, partner at Cinneamhain Ventures. This article is excerpted from The Node, CoinDesks daily roundup of the most pivotal stories in blockchain and crypto news. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. The Chinese real-estate giant is facing down $300 billion in debt that it cant pay back. Which countries have banned TikTok, and why? Something weird happened today in crypto-world. 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. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. NOW WATCH: WATCH: How any business can use live shopping to net thousands of dollars per stream, said every tether coin was fully backed by US dollars in bank accounts. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. I think one time, Stanley mentioned when he saw employees on downtime he . There is a chance that were currently staring down the barrel of the next financial meltdown.. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. See here for a complete list of exchanges and delays. 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. 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. 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 . 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. Who to fire? 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. Your weekly wrap of Web3 news and trends. In November 2018, it had to transfer a substantial portion of its backing to Bitfinex after a loss of funds, meaning that it no longer met its claim of being fully backed by US dollars. Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so, the company said. Tether reserves the right to change these Terms at any time without notice, and such changed Terms will take effect once we post them at the Site. In a blog post a few days after its reserves report was released, Hoegner said the commercial paper that the company held was purchased through recognised issuance programmes, the vast majority highly rated, and that there were limits on individual issuers and regional exposures. 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 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. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. Kryptowhrungsunterricht/E-Book-Download. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. What financial advisors need to know about crypto. 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. 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. 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. 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. different direction, choosing to only use cash reserves and cash equivalents, US Treasury is expected to release an in-depth report on stablecoins. Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Evergrande, China's second-largest property developer, is to blame. "Tether said they have no Evergrande exposure," Cramer acknowledged. 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. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. 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. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. Evergrande, for its part, is the largest commercial paper issuer in China's real estate market, owning some $32 billion worth of commercial paper at the end of last year. 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'; By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. The downgrade from A to AA applies both to the bonds and their issuer rating. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. 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. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). However that's not stopped its popularity. 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. 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. 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. Hit him up! Head to consensus.coindesk.com to register and buy your pass now. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. That has included harshly curtailing apparently successful fintech firms like Ant Group and, most recently, instituting restrictions on video games, which cant be good for Tencent and other firms. All quotes delayed a minimum of 15 minutes. read more. Our Standards: The Thomson Reuters Trust Principles. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. 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 has amply demonstrated, most recently through assurance opinions from [auditor] Moore Cayman, that all issued tethers are, in fact, fully reserved, he added. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. With Tether we are welcoming all that. Tether grants you a limited license to access and make personal use of the Site. In fact, $30 billion of the Tethers dollar holdings are invested in commercial paper, which makes one of the largest holders of this debt asset class and puts the firm ahead of some top financial firms. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information. The transformation of value in the digital age. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. The company has more than $300 billion in total liabilities and recently warned investors it may default on its debts. Head to consensus.coindesk.com to register and buy your pass now. var abkw = window.abkw || ''; 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. Got a confidential news tip? Money Reimagined The transformation of value in the digital age. Your weekly wrap of Web3 news and trends. This type of debt financing is back in the limelight as China's second largest property developer Evergrande teeters on the brink of default. 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.. CoinDesk journalists are not allowed to purchase stock outright in DCG. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. How much of it is Chinese or specifically from Evergrande is unclear. The latest moves in crypto markets, in context. The downgrade from A to AA applies both to the bonds and their issuer rating. The outlet estimated that the actual figure could be even higher, since it has other units, which also issue commercial paper. How the biggest companies plan mass lay-offs, The benefits of revealing neurodiversity in the workplace, Tim Peake: I do not see us having a problem getting to Mars, Michelle Yeoh: Finally we are being seen, Our ski trip made me question my life choices, Apocalypse then: lessons from history in tackling climate shocks, Stablecoins: bitcoin for squares has its own downsides. He takes the lead in the majority of the company's communications, while the CEO and CFO stay firmly in the background. See here for a complete list of exchanges and delays. Ardoino joined Tether back in late 2015 as a developer before being appointed chief technology officer around a year later. 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 US Treasury is expected to release an in-depth report on stablecoins any day now. 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. Tether published its first Reserves Breakdown in March 2021. Ardoino clarified that Tether does not hold Evergrande's commercial paper. The report revealed that the stablecoin company also provided a billion-dollar loan to Celsius, a centralized crypto lending platform that was recently accused of violating securities laws by the U.S. States of Alabama, Texas, and New Jersey. Approximately half of Tethers $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. Sign up for notifications from Insider! 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. "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. 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. 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. Bitcoin, meanwhile, remained above all-time highs by about 5.5%. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. At the end of 2020, it had $32 billion worth of commercial paper. Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. 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. "There is an entire world outside of the US," Ardoino said. Since Evergrande's potential collapse could have broad implications for the commercial paper market and Tether's most recent attestation contains no breakdown of either the geographical exposure or investment category of the paper it holds, market participants are concerned about the risks to Tether's books. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . 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. Cramer said his crypto concerns right now begin with tether, a stablecoin that's pegged to the U.S. dollar. The latest moves in crypto markets, in context. The biggest crypto news and ideas of the day. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities. clarified that Tether does not hold Evergrande's commercial paper. Be a smarter, safer investor in eight weeks. 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. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. "Tether has maintained its stability . Cramer has a position in ether, which runs on the Ethereum blockchain. You can subscribe to get the full newsletter here. We use cookies to improve your experience. It earned this title after the Chinese government banned the company from issuing longer-term debt. 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. var pid588602 = window.pid588602 || rnd; Tether's market capitalization surged 357% in the last year to around $69 billion. and other data for a number of reasons, such as keeping FT Sites reliable and secure, Investors aren't only looking at audits, there's also regulation. "So if A1 commercial paper rated by a US Agency is considered safe [then] why is where the issuer located matters?". CNBC's Jim Cramer said Monday investors should take profits in their crypto holdings. 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. "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. He also said that Tether did not hold any commercial paper issued by cryptocurrency exchanges or affiliated entities. Ardoino wouldn't comment on whether the Treasury directly spoke to Tether for the report. According to Bloomberg BW, stablecoin issuer Tether has extended billions of dollars in loans to Chinese companies. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. 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. But is it bad? Which countries in the EU are buying the most electric cars? That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. var rnd = window.rnd || Math.floor(Math.random()*10e6); What does one have to do with the other? Neither Tether nor Bitfinex admitted wrongdoing. 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. 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. promo 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. Given Tethers record to this point, that may take a while. Tethers are today, and have always been, fully backed by assets sufficient to cover the amount of tethers in circulation, Hoegner said of its latest disclosure. 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. David Z. Morris is CoinDesk's Chief Insights Columnist. Can it be liquidated to meet redemptions? Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Tether is the third-largest cryptocurrency by market value, trailing only ether and bitcoin, which are second and first, respectively. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. 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. Analysis: Goldman Sachs faces hard sell for its consumer assets, Ex-Goldman banker Ng deserves 15 years in prison, US prosecutors say, Reporting by Alun John It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. "Don't let it become a loss. 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. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? 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? Such holdings of companies short-term debt would make it the seventh largest in the world. read more. We believe that this is the only way that these technologies are really created and can become mainstream.". personalising content and ads, providing social media features and to Hundreds of customers have protested in front of the companys offices alleging mistreatment or fraud. 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. His role is much broader than tech chief. The information on this website is subject to change without notice. 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. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. But tether's growth of around 3,350% since early 2019 is seen as reason to celebrate. 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. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent in corporate bonds, funds and precious metals. Markets cant function without transparent information flows, full stop. As demand for tether grew, market participants started to question whether that was the case. 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. The Evergrande Group is the second-largest property developer in China by sales. Smart navigation app uses 3D sound to guide blind people. In fact, Tether claimed earlier in the year that 50% of its reserves come from commercial paper. 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. Tether grants you a limited license to access and make personal use of the Site. CoinDesk journalists are not allowed to purchase stock outright in DCG. Krypto. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? var plc588602 = window.plc588602 || 0; Those questions can only be answered with a little more transparency from the stablecoins issuer. Tether said that it funnelled roughly half its reserves into commercial paper. 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 . 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. We use "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said.
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