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And despite it seeming as though the stablecoins are in competition, Ardoino believes this will be key to success with regulators. Overall, the studio has a watchful eye. Is Evergrande's Fall Influencing the Depeg Issue for Tether? In those two years, bitcoins market cap has gone up eight times, from $159 billion to $1.3 trillion. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. Got a confidential news tip? HONG KONG (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, as regulatory scrutiny into risks from this type of token grow. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Hoegner said the commercial paper reserves included amounts held internationally with further sub-custody at major global institutions. 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. Lab leak theory: 3 years on, will we ever know where COVID came from? Debate swirls about whether that impact would spread beyond China, but theres broad agreement that impact within the country would be near catastrophic. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). He is also now CTO of cryptocurrency exchange Bitfinex. Tether is a typical design firm that will value the client's needs over their employees. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . "There is an entire world outside of the US," Ardoino said. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? 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'; Evergrande and China's Looming Risk to Tether - CoinDesk The company is currently under investigation by multiple law enforcement agencies, including the U.S. Department of Justice and the Federal Bureau of Investigation. It seems increasingly likely that Evergrande is fated instead for the glue factory. 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. Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. cookies JPMorgan estimates stablecoin operator would be one of the largest investors in the US market, Tethers commercial paper disclosure places it among global giants, Video: Why every Dogecoin has its day - crypto explained, Russian far-right fighter claims border stunt exposes Putins weakness, Germany seeks to buy Leopard tanks from Switzerland, Germany and Italy stall EU ban on combustion engines, Russia on alert after reconnaissance group crosses over from Ukraine, Ukraine asks EU for 250,000 artillery shells a month, Panic station at Fox News: how the Murdochs agonised over Trumps loss, UK cabbage king turns to plant-based proteins, Saudi owner of Londons most expensive house sued over alleged unpaid private jet bills, UK housing market braced for make-or-break spring, Airlines plan to sue Dutch government over Schiphol airport flight cap, There are no domestic equity investors: why companies are fleeing Londons stock market, Deluge of inflation data pushes US borrowing costs to 2007 levels, Live news updates from March 3: Amazon pauses HQ2 construction, UK regulators launch LME probe, Clutching Warrens letter, Im still positive on stocks, Fears for London market after SoftBanks Arm and building group CRH opt for New York, Joe Biden teaches the EU a lesson or two on big state dirigisme. It was news to us.. Stablecoin Tether says holds no Evergrande commercial paper Tether Reports 17% Decrease in Commercial Paper | Alexandria Tether says it doesn't hold any commercial paper issued by Evergrande 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. Explainer: How China Evergrande's debt troubles pose a - Reuters analyse how our Sites are used. 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. ", 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. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. See here for a complete list of exchanges and delays. He said that the New York attorney-general had no clear findings that customers at any point were at risk of being unable to redeem tethers because of a lack of backing. 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. Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. The stablecoin issuer says its goal is to reduce its commercial paper holdings to zero. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. It earned this title after the Chinese government banned the company from issuing longer-term debt. Krypto. Ardoino clarified that Tether does not hold Evergrande's commercial paper. 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. 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. Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans! recently accused of violating securities laws. You can subscribe to get the full newsletter here. Ardoino clarified that Tether does not hold Evergrande's commercial paper. 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. News and analysis for the professional investor. Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. In fact, Tether claimed earlier in the year that 50% of its reserves come from commercial paper. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. var pid588602 = window.pid588602 || rnd; personalising content and ads, providing social media features and to We use 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. 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. 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. Evergrande, China's second-largest property developer, is to blame. What does one have to do with the other? The transformation of value in the digital age. "If tether collapsed, well, then it's going to gut the whole crypto ecosystem," he said. 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. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. 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. "We are working with an amazing counterparty that is extremely professional and has a deep knowledge of traditional finance and also crypto markets and the blockchain industry and so on. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. I think one time, Stanley mentioned when he saw employees on downtime he . Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. Tether grants you a limited license to access and make personal use of the Site. Tether Claims to Hold no Commercial Paper From Struggling Evergrande Tether has vehemently dismissed the claims and has stated it maintains the full value of the reserves backing its stablecoin supply. 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. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. Tether published its first Reserves Breakdown in March 2021. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, about a month ago Bloomberg BusinessWeek reported Tether's holdings included "billions of. Cramer has a position in ether, which runs on the Ethereum blockchain. 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. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. Stablecoin Tether says holds no Evergrande commercial paper - Yahoo! 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. Ardoino wouldn't comment on whether the Treasury directly spoke to Tether for the report. Sell some, stay long the rest, then let's wait and see if China changes its attitude toward an Evergrande bailout.". CNBC's Jim Cramer said Monday investors should take profits in their crypto holdings. 2023 CNBC LLC. What should a secular society really look like? We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. 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. Tether Claims to Hold no Commercial Paper From Struggling Evergrande The biggest crypto news and ideas of the day. Tether has faced scrutiny from authorities and investigators in the past. According to the attorney-generals investigation, there were instances when Tether was not fully backed in the past. David Z. Morris is CoinDesk's Chief Insights Columnist. Tether Denies Holding Commercial Paper Issued by Troubled Real Estate Our Standards: The Thomson Reuters Trust Principles. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. "While old information about Tether's reserves and so on is public, it keeps growing," Ardoino said. But this is not just about one company: Even if Tether doesnt specifically hold any of Evergrandes short-term debt, it could have huge exposure in the form of other Chinese obligations. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. 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. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. 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. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. 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. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.". We want to hear from you. His role is much broader than tech chief. How China's Property Market Could Trigger a Crypto Crash "Don't let it become a loss. 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. 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. 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 company has more than $300 billion in total liabilities and recently warned investors it may default on its debts. At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". The US Treasury is expected to release an in-depth report on stablecoins any day now. 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. 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. "Tether said they have no Evergrande exposure," Cramer acknowledged. "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. 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. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. 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. Probing the intersection of crypto and government. Critics say it's not enough. different direction, choosing to only use cash reserves and cash equivalents, US Treasury is expected to release an in-depth report on stablecoins. 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. For critics of Tether, the new economy of digital assets is based on the worlds oldest profession: real estate speculation. HONGKONG Tether, the worlds 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. 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". Chinese real estate developers are some of the worlds biggest issuers of commercial paper. Be a smarter, safer investor in eight weeks. 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. For Ardoino and the team, this highlights the crypto community's faith in Tether. Questions for Cramer? 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. 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. But this reported accumulation has largely gone unnoticed on Wall Street, according to several of the biggest players in the market including bank traders, analysts and money market funds. 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?