Is Tether 100% supported by dollars?
Tether admitted last year that he had a certain amount of cash, but also bought a significant amount of treasury notes, which are short-term corporate loans. Tether did not disclose which companies have treasury notes or where they are, which has raised concerns.
However, the company wants to gradually reduce its business paper reserves. Trade sheet accounts for more than 30% of Tether’s total inventory in Q4 2021, up from 44% in Q3.
“Over time, we will reduce business papers; We are not done yet “Paolo Ardoino, technical director of Tether and Bitfinex exchanges, told CNBC during the summit. Paris Blockchain Week April 13.
According to an accounting firm, about $ 30 billion of its dollar assets have been invested in business paper. This would put Tether on par with a bank Charles Swap ; And the 7th largest holder of this type of debt.
What to do if Tether collapses or goes bankrupt?
After an anonymous anti-Tether blog post titled Big Short: Inside Bitcoin’s Doomsday Machine ⁇ Viral, Jim Kramer of CNBC advised viewers to sell their cryptocurrencies! ” If the tether collapses, it will destroy the entire crypto ecosystem.He announced.
The amount of assets speculated in dollars Tether, In the view of the regulators, is large enough to assume that all Tethers tokens will be supported in dollars, which is dangerous. If a large number of investors demand their money back at once, the company may be forced to liquidate its assets at a loss, which could trigger a snowball effect.
The decline is not just about cryptocurrencies. Credit markets can fail, leading to losses in the regulated financial system. The collapse of Tether would be even more devastating than that Bernard L. Modoff Investment Securities.