Lab leak theory: 3 years on, will we ever know where COVID came from? 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. It seems increasingly likely that Evergrande is fated instead for the glue factory. He also said that Tether did not hold any commercial paper issued by cryptocurrency exchanges or affiliated entities. Chinese real estate developers are some of the worlds biggest issuers of commercial paper. document.write(''); Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Stay up to date with what you want to know. Chinas loose and reactive (at best) financial regulatory environment is one reason anxiety around Tether has largely centered on whether it holds Chinese commercial paper in general not just whether it holds Evergrandes. 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. "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.". different direction, choosing to only use cash reserves and cash equivalents, US Treasury is expected to release an in-depth report on stablecoins. recently accused of violating securities laws. This was later repaid by Bitfinex. Get this delivered to your inbox, and more info about our products and services. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Crypto investors need to be alert while the Evergrande situation unfolds even if they don't personally own tether because the stablecoin is used to purchase bitcoin and ether, Cramer said. Our Standards: The Thomson Reuters Trust Principles. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. 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. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information. 2023 CNBC LLC. Tether has faced scrutiny from authorities and investigators in the past. "There is an entire world outside of the US," Ardoino said. Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent. Tether published its first Reserves Breakdown in March 2021. As demand for tether grew, market participants started to question whether that was the case. The stablecoin issuer says its goal is to reduce its commercial paper holdings to zero. More Articles Evergrande has now had to suspend trading of that unit's onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. 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. Got a confidential news tip? However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. According to Bloomberg BW, stablecoin issuer Tether has extended billions of dollars in loans to Chinese companies. News and analysis for the professional investor. 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. Siddharth Venkataramakrishnan and Joe Rennison. Since Tether doesnt disclose specifics about the commercial paper that substantially backs its stablecoin, this is a bit like serving a houseguest a sandwich and loudly assuring them that it is absolutely NOT made from diseased horsemeat. Please enter your email address. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. So while Evergrande may not be on the books, the concern is that the commercial paper may be from other real estate firms. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". 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. It was news to us.. But these are the same rating agencies that are rating the US Treasuries," Ardoino said. Money Reimagined The transformation of value in the digital age. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. 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. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. The biggest crypto news and ideas of the day. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. Smart navigation app uses 3D sound to guide blind people. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. It earned this title after the Chinese government banned the company from issuing longer-term debt. Your Use of the Site. It is also alleged that Tether also owns commercial paper issued by Evergrande, Chinas second-largest real estate developer, which is itself experiencing a major liquidity crisis. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. Balancing Innovation and Regulation: Why a Risk-Based Approach to Crypto Could Benefit America, Crypto Price Predictions, March 2023: Altcoins Are About to Take a Wild Turn, Top 10 Telegram Channels for Crypto Signals in 2023, Binance Accused of Malpractices Similar to FTX, Navigating Crypto Taxes Made Easy & Cheap: Meet Cryptiony. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. Tether has been beset by transparency concerns in the past as well. All evidence points to tether's CP as a formal accounting trick to say "we just give a bunch of Tether to FTX, Binance, and Cumberland as stand in for USD to provide liquidity". A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. "The case is you have two choices, you trust the rating agencies, or you don't trust them. Be a smarter, safer investor in eight weeks. Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. 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. clarified that Tether does not hold Evergrande's commercial paper. 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. Tether had stated since its launch in 2014 that its tokens were fully backed by US dollars in bank accounts, before pivoting in February 2019 to say that its reserves included traditional currency, cash equivalents and other assets and receivables. The tumble appears to have been triggered by the mounting problems at embattled property giant China. Or perhaps there are other ways to explain things. Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. read more. 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. 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. Investors aren't only looking at audits, there's also regulation. Cash made up only 2.9 per cent, according to the companys disclosure. Head to consensus.coindesk.com to register and buy your pass now. ; ; Vergleich; ; ; ; "If tether collapsed, well, then it's going to gut the whole crypto ecosystem," he said. 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. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. What should a secular society really look like? var pid588602 = window.pid588602 || rnd; 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. You can subscribe to get the full newsletter here. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. The developer on Thursday applied to suspend trading of that unit's. Over the past two years, yet another headwind has entered the China mix. analyse how our Sites are used. "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. All quotes delayed a minimum of 15 minutes. News and analysis for the professional investor. Such holdings of companies short-term debt would make it the seventh largest in the world. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. 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. The downgrade from A to AA applies both to the bonds and their issuer rating. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? 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. According to a spokesperson from Tether, Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so. Sign up for free newsletters and get more CNBC delivered to your inbox. 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. You will receive a link to create a new password via email. 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 stablecoin issuer Tether this week declared that it doesnt hold short-term debt issued by troubled Chinese real estate developer Evergrande. CoinDesk journalists are not allowed to purchase stock outright in DCG. BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back. read more. Chinese real estate developers are some of the world's biggest issuers of commercial paper. 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. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? We use cookies to improve your experience. It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. The company has more than $300 billion in total liabilities and recently warned investors it may default on its debts. "Tether has maintained its stability . Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. The Node The biggest crypto news and ideas of the day. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show.
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