"Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. cookies Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.". What financial advisors need to know about crypto. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. Probing the intersection of crypto and government. Regulators are starting to pay greater attention to stablecoins - digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets - and some observers have raised concerns about the tokens' liquidity in a time of stress. You will receive a link to create a new password via email. Ardoino wouldn't comment on whether the Treasury directly spoke to Tether for the report. 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. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. "So Tether is extremely glad that there is a USDC, that there is Paxos and all the other stablecoins, because that is how we become an industry.". In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. var abkw = window.abkw || ''; 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. All quotes delayed a minimum of 15 minutes. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. Tether has revealed that its commercial paper holdings would be $3.5 billion by July 31. Tether has amply demonstrated, most recently through assurance opinions from [auditor] Moore Cayman, that all issued tethers are, in fact, fully reserved, he added. 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'; 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. Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans! 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. 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. Tether grants you a limited license to access and make personal use of the Site. Sign up for free newsletters and get more CNBC delivered to your inbox. But the firm has not clarified the exact details of its debtors. It is also alleged that Tether also owns commercial paper issued by Evergrande, China's second-largest real estate developer, which is itself experiencing a major liquidity crisis. 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. 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. 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. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. The latest moves in crypto markets, in context. "The vast majority of the commercial paper held by Tether is . Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. The report investigated the quality of assets backing USDT, and alleged the debt assets supporting Tether dollar reserves may of questionable nature. The developer on Thursday applied to suspend trading of that unit's. Something weird happened today in crypto-world. 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. "But tons of Chinese businesses stand to get crushed by this fiasco, and they have Evergrande exposure, and that could spell real trouble if the dominoes fall here.". Evergrande was successful in raising around $8 billion by August, according to a report from Bloomberg, but it is just a drop in the pan compared to what it still owes. 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. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. According to the attorney-generals investigation, there were instances when Tether was not fully backed in the past. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. Hoegner said the commercial paper reserves included amounts held internationally with further sub-custody at major global institutions. However, as Tethers reserve holdings have been questioned by regulators such as the New York attorney-general in the past, providing banking services to Tether will likely raise reputational risk concerns, wrote the JPMorgan analysts. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself. Cramer has a position in ether, which runs on the Ethereum blockchain. Got a confidential news tip? By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. Stay up to date with what you want to know. 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. 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. A government bailout is also a possibility. USDT leads the stablecoin market by trading volume and acts as the top base-pair currency for trading across several large crypto exchanges, including Binance, FTX, and others. The information on this website is subject to change without notice. Please enter your email address. The outlet estimated that the actual figure could be even higher, since it has other units, which also issue commercial paper. Sign up for notifications from Insider! Data is a real-time snapshot *Data is delayed at least 15 minutes. USDT is designed to be pegged to U.S. dollar at a 1:1 ratio, thereby making it possible to trade crypto assets without relying on traditional banking services by providing a stable unit of account. Commercial paper typically has low default rates. 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. See here for a complete list of exchanges and delays. Our Standards: The Thomson Reuters Trust Principles. 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. We use cookies to improve your experience. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. The company is currently under investigation by multiple law enforcement agencies, including the U.S. Department of Justice and the Federal Bureau of Investigation. Stanley will arrange a new seating arrangement sporadically. Bitcoin and other cryptocurrencies were crashing Monday amid a global selloff in risk assets. 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 . "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. But since it's unsecured, there is also very little recourse for investors if an issuer does default. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. 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. 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. 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. Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. A Division of NBCUniversal. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? However that's not stopped its popularity. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). Tether is the third-largest cryptocurrency by market value, trailing only ether and bitcoin, which are second and first, respectively. "So if A1 commercial paper rated by a US Agency is considered safe [then] why is where the issuer located matters?". This license does not include nor permit your resale or commercial use of the Site or its contents. 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. 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. ", Regulators are starting to pay greater attention to stablecoins - digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets - and some observers have raised concerns about the tokens' liquidity in a time of stress. Bitcoin, meanwhile, remained above all-time highs by about 5.5%. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities. Regulators are starting to pay greater attention to stablecoins digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets and some observers have raised concerns about the tokens liquidity in a time of stress. 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. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. 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 transformation of value in the digital age. The most recent report from accountant Moore Cayman shows more than 50% of the assets backing a tether coin were commercial paper and certificates of deposit, rather than dollars, or short-term government paper. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. 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. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. As demand for tether grew, market participants started to question whether that was the case. 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. Chinese real estate developers are some of the world's biggest issuers of commercial paper. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Cramer urges investors to take some crypto profits, citing Evergrande-related risks, struggling Chinese property developer Evergrande, stablecoin that's pegged to the U.S. dollar, third-largest cryptocurrency by market value. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. It earned this title after the Chinese government banned the company from issuing longer-term debt. This is not the first time concerns about the true value of USDT have emerged. The value of loans backing Tether's stablecoin reserves could be a risk factor for the crypto industry. The Evergrande Group is the second-largest property developer in China by sales. document.write('