I’m convinced that in its early years, Tether operated as a scam, skimming deposits and creating coins out of thin air. But once they realized they had accidentally created a money-printing machine, they attempted to become legit and quietly buried the evidence of their past.
Tether is still banned in NY, AFAICT (Maybe I'm wrong here).
> But once they realized they had accidentally created a money-printing machine
So that's a joke right? They on-purposely created a money-printing machine. But my god, the fraud was so profitable they needed a way to make it legit because no one wants to live in Panama.
Yah crypto has an ocd obsession with cash, usd, and actually valuable stuff like gov backed bonds. If crypto thought for a femto second they couldn't get the above crypto would self dissolve in 10 mins. These are the ends, the only ends that matter. The rest is means ... a side show.
Maybe the post is correct, but it offers nearly no context or evidence for its claim. As a reader, if I already knew enough to validate that this article was worth trusting, I wouldn’t need the article. On the other hand, I am interested in the premise, but don’t know enough to tell if the article is true, and the article has no sources/evidence to back up its claim. I don’t think there is any situation in which such an article is useful, except as an “echo-chamber” kind of piece
Circle is the company managing USDC and is the one to watch for a similar number. They just IPO'd and will probably have more precise data in the next earnings report, but for IPO it seems they reported 2024 $1.5B revenue mostly from interest. I couldn't find holding percentages but as a founder of the token, we can assume much lies on Coinbase - they give a pretty good yield so any coins there will have fairly low interest income for Circle, and their revenue would be mostly coins moved off of Coinbase.
USDC is primarily holding a mix of treasuries and cash. It's unclear how much directly, but if you did some reverse engineering of the math, you could probably get a close idea. Since it's not regulated, the price can drop precipitously quicker than the stock market, so there's some risk calculation that determines their treasuries/cash split.
Rationally it is silly to hold too much of a depreciating asset like a USD backed stablecoin because it loses value to inflation, also because it earns no interest. The value is in holding it briefly, exchanging it for appreciating risk assets, e.g. PAXG, BTC, XMR, ETH, etc. as soon as one is comfortable with the transition.
What happens if enough people want to exchange USDT for actual USD? Tether goes down the same way SVB went down: Unable to offload long-term government bonds for full dollar value
It won't go down. It will merely break its dollar peg, dipping in value temporarily until the bonds mature, at which time it would restore its peg. Most people would be wise enough to not sell it at a dipped value if an independent audit report can confirm the Treasury backing.
That is completely false since the stablecoin legislation passed this year requires the issuer to hold adequate funds backing their issuance. The stablecoin is in effect regulated by the government.
I mean you're not wrong. Tether is effectively operating as a weird kind of bank and is susceptible to the same failure modes if people go on a bank run. You just don't get to run to the FDIC if it happens.
USDT does have some nice properties compared to a bank account like being able to mint accounts at will, no deposit or transfer limits, no KYC, faster settlement than wire transfers, can send internationally with little fanfare. I'm sure there's someone who is pumped about this but I'm not sure if the market is large enough to support the size they've grown to.
$13b on $113b =12%. With treasuries that is only possible with massive leverage, negative convexity, or other reindeer games. I doubt the prospectus will tell much. Good luck to everyone involved but I personally am envisioning a ten foot pole and all that.
13B it’s not entirely from treasuries. The breakdown is
7B from treasuries —> probably from the methods you described
5B from Gold —> believable if you notice how gold has done in 2024
1B from other sources. No idea what they are.
The article mentions that tether may not have been audited by a third party. So I’m not sure how believable these numbers are.
I’m convinced that in its early years, Tether operated as a scam, skimming deposits and creating coins out of thin air. But once they realized they had accidentally created a money-printing machine, they attempted to become legit and quietly buried the evidence of their past.
Tether is still banned in NY, AFAICT (Maybe I'm wrong here).
> But once they realized they had accidentally created a money-printing machine
So that's a joke right? They on-purposely created a money-printing machine. But my god, the fraud was so profitable they needed a way to make it legit because no one wants to live in Panama.
Are we sure they actually have the reserves?
I think at this point yes, if you follow their news it seems they see now as a big financial group that goes beyond crypto.
Yah crypto has an ocd obsession with cash, usd, and actually valuable stuff like gov backed bonds. If crypto thought for a femto second they couldn't get the above crypto would self dissolve in 10 mins. These are the ends, the only ends that matter. The rest is means ... a side show.
Maybe the post is correct, but it offers nearly no context or evidence for its claim. As a reader, if I already knew enough to validate that this article was worth trusting, I wouldn’t need the article. On the other hand, I am interested in the premise, but don’t know enough to tell if the article is true, and the article has no sources/evidence to back up its claim. I don’t think there is any situation in which such an article is useful, except as an “echo-chamber” kind of piece
Does USDC make profit in same range as USDT?
Circle is the company managing USDC and is the one to watch for a similar number. They just IPO'd and will probably have more precise data in the next earnings report, but for IPO it seems they reported 2024 $1.5B revenue mostly from interest. I couldn't find holding percentages but as a founder of the token, we can assume much lies on Coinbase - they give a pretty good yield so any coins there will have fairly low interest income for Circle, and their revenue would be mostly coins moved off of Coinbase.
USDC is primarily holding a mix of treasuries and cash. It's unclear how much directly, but if you did some reverse engineering of the math, you could probably get a close idea. Since it's not regulated, the price can drop precipitously quicker than the stock market, so there's some risk calculation that determines their treasuries/cash split.
Rationally it is silly to hold too much of a depreciating asset like a USD backed stablecoin because it loses value to inflation, also because it earns no interest. The value is in holding it briefly, exchanging it for appreciating risk assets, e.g. PAXG, BTC, XMR, ETH, etc. as soon as one is comfortable with the transition.
What happens if enough people want to exchange USDT for actual USD? Tether goes down the same way SVB went down: Unable to offload long-term government bonds for full dollar value
It won't go down. It will merely break its dollar peg, dipping in value temporarily until the bonds mature, at which time it would restore its peg. Most people would be wise enough to not sell it at a dipped value if an independent audit report can confirm the Treasury backing.
If I buy a CD from a bank, it has a fixed APR and insured by the FDIC. If I buy a stock there's upside and downside, but regulated by the SEC.
A stable coin has no upside and all downside.
> A stable coin has no upside and all downside.
That is completely false since the stablecoin legislation passed this year requires the issuer to hold adequate funds backing their issuance. The stablecoin is in effect regulated by the government.
I mean you're not wrong. Tether is effectively operating as a weird kind of bank and is susceptible to the same failure modes if people go on a bank run. You just don't get to run to the FDIC if it happens.
USDT does have some nice properties compared to a bank account like being able to mint accounts at will, no deposit or transfer limits, no KYC, faster settlement than wire transfers, can send internationally with little fanfare. I'm sure there's someone who is pumped about this but I'm not sure if the market is large enough to support the size they've grown to.
Does anyone trust these sketchy crypto ghouls to do right without serious regulation?
$13b on $113b =12%. With treasuries that is only possible with massive leverage, negative convexity, or other reindeer games. I doubt the prospectus will tell much. Good luck to everyone involved but I personally am envisioning a ten foot pole and all that.
13B it’s not entirely from treasuries. The breakdown is 7B from treasuries —> probably from the methods you described 5B from Gold —> believable if you notice how gold has done in 2024 1B from other sources. No idea what they are.
The article mentions that tether may not have been audited by a third party. So I’m not sure how believable these numbers are.
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