(Reporting by Alun John; Editing by Mark Potter), Ukraine Latest: Russia Continues Efforts to Encircle Bakhmut, INSIGHT-Before fatal collapse, Turkish building had skirted code thanks to Erdogan policy, In Chicago, adapting electric buses to winters challenges, Ukraine ally Kallas fights for reelection in Estonia vote, Global race to boost electric vehicle range in cold weather. This type of debt financing is back in the limelight as China's second largest property developer Evergrande teeters on the brink of default. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. As we have indicated in our published statements and 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 A-2 and above rated issuers.. 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, About half of Tethers roughly $75 billion in assets, Tether (the company) said back in September. News and analysis for the professional investor. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Even the chance to speak to Ardoino is rare. Neither Tether nor Bitfinex admitted wrongdoing. Thus, it has grown 19-fold in a matter of two dozen months. Since Evergrande's potential collapse could have broad implications for the commercial paper market and Tether's most recent attestation contains no breakdown of either the geographical exposure or investment category of the paper it holds, market participants are concerned about the risks to Tether's books. "If tether collapsed, well, then it's going to gut the whole crypto ecosystem," he said. Ardoino wouldn't comment on whether the Treasury directly spoke to Tether for the report. "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. But it could still take Tether with it, depending on whats actually in that stablecoin sandwich. var plc588602 = window.plc588602 || 0; A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. Evergrande is just the latest major Chinese firm to have serious problems due to apparent fraud or mismanagement. What should a secular society really look like? "Tether has maintained its stability . We use 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. A government bailout is also a possibility. Your Use of the Site. 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. Chinese real estate developers are some of the world's biggest issuers of commercial paper. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. 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. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Evergrande is the biggest issuer of commercial papers. Something weird happened today in crypto-world. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? Stablecoins are rarely on the tips of investors' tongues when it comes to talking about the volatility-filled headline-grabbing crypto market. What financial advisors need to know about crypto. 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. Cash made up only 2.9 per cent, according to the companys disclosure. Our Standards: The Thomson Reuters Trust Principles. 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. The developer on Thursday applied to suspend trading of that unit's. Tether is a typical design firm that will value the client's needs over their employees. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. The biggest crypto news and ideas of the day. 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. 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. 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 downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. 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. News and analysis for the professional investor. Lab leak theory: 3 years on, will we ever know where COVID came from? While Tether (the company) said back in September it doesnt hold Evergrande commercial paper, about a month ago Bloomberg BusinessWeek reported Tethers holdings included billions of dollars of short-term loans to large Chinese companies something money-market funds avoid.. We use cookies to improve your experience. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. The Evergrande Group is the second-largest property developer in China by sales. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". Be a smarter, safer investor in eight weeks. 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 Division of NBCUniversal. In response to the Bloomberg BW report, it released a blog post claiming that the report is spreading misinformation.. The most recent attestation states the average credit rating of its commercial paper holdings is "A-1" - an investment grade based on the ratings scale of Moody's Investor Services, a ratings agency. 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. "Don't let it become a loss. About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. Hoegner said the commercial paper reserves included amounts held internationally with further sub-custody at major global institutions. 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. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. The value of loans backing Tether's stablecoin reserves could be a risk factor for the crypto industry. The Chinese real-estate giant is facing down $300 billion in debt that it cant pay back. Tether published its first Reserves Breakdown in March 2021. document.write('
'); Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Siddharth Venkataramakrishnan and Joe Rennison. You can subscribe to get the full newsletter here. Evergrande has now had to suspend trading of. "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.". Head to consensus.coindesk.com to register and buy your pass now. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. What financial advisors need to know about crypto. 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. read more. Given Tethers record to this point, that may take a while. 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. 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. According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. Evergrande, for its part, is the largest commercial paper issuer in China's real estate market, owning some $32 billion worth of commercial paper at the end of last year. 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. We do not give personalized investment advice or other financial advice. var rnd = window.rnd || Math.floor(Math.random()*10e6); The tumble appears to have been triggered by the mounting problems at embattled property giant China. Got a confidential news tip? clarified that Tether does not hold Evergrande's commercial paper. This article is excerpted from The Node, CoinDesks daily roundup of the most pivotal stories in blockchain and crypto news. What does one have to do with the other? 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. Which countries have embraced a 4-day workweek and hows it going. How the biggest companies plan mass lay-offs, The benefits of revealing neurodiversity in the workplace, Tim Peake: I do not see us having a problem getting to Mars, Michelle Yeoh: Finally we are being seen, Our ski trip made me question my life choices, Apocalypse then: lessons from history in tackling climate shocks, Stablecoins: bitcoin for squares has its own downsides. 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. The report investigated the quality of assets backing USDT, and alleged the debt assets supporting Tether dollar reserves may of questionable nature. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. 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. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. "Tether said they have no Evergrande exposure," Cramer acknowledged. 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. Please enter your email address. He is also now CTO of cryptocurrency exchange Bitfinex. 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. And it could offer savvy investors the opportunity to hedge against the Tether Bomb an affectionate term for the fact that nobody really From 2018 onwards, new stablecoins have been pouring onto the markets. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities. 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. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.". The downgrade from A to AA applies both to the bonds and their issuer rating. The developer on Thursday applied to suspend trading of that unit's. That has included harshly curtailing apparently successful fintech firms like Ant Group and, most recently, instituting restrictions on video games, which cant be good for Tencent and other firms. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . With Tether we are welcoming all that. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). However that's not stopped its popularity. 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. The downgrade from A to AA applies both to the bonds and their issuer rating. The Node The biggest crypto news and ideas of the day. As a result, even though Tether says it doesn't hold commercial paper issued by Evergrande, an upheaval in the commercial paper market could still have wider . Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent. But these have frequently raised more questions than answers. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. Tether said that it funnelled roughly half its reserves into 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. At the end of 2020, it had $32 billion worth of commercial paper. See here for a complete list of exchanges and delays. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself. 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? In total, Tether holds 52% US Treasury bonds, 37% commercial paper, with the remainder in cash and money market funds. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. 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. Those questions can only be answered with a little more transparency from the stablecoins issuer. But the firm has not clarified the exact details of its debtors. Investors aren't only looking at audits, there's also regulation. This is not the first time concerns about the true value of USDT have emerged. Concerns intensified after Evergrande admitted in June it did not pay some commercial paper on time, and news in July a Chinese court froze a $20 million bank deposit held by the firm on the . The transformation of value in the digital age. 2023 CNBC LLC. Bitcoin and other cryptocurrencies were crashing Monday amid a global selloff in risk assets. 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. 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. The US Treasury is expected to release an in-depth report on stablecoins any day 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.". Now onto the crypto context, if you have not guess it already, Tether's USDT that tracks the value of the US dollar is backed by a significant amount of Chinese commercial paper. Ardoino clarified that Tether does not hold Evergrande's commercial paper. And despite it seeming as though the stablecoins are in competition, Ardoino believes this will be key to success with regulators. Stay up to date with what you want to know. For Ardoino and the team, this highlights the crypto community's faith in Tether. Bitcoin, meanwhile, remained above all-time highs by about 5.5%. Your weekly wrap of Web3 news and trends. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? How Ethereum's evolution impacts crypto markets. 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 . personalising content and ads, providing social media features and to 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. Critics say it's not enough. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. 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. Holiday events will take place, but it is silently frowned upon to join in. Over the past two years, yet another headwind has entered the China mix. 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 . It earned this title after the Chinese government banned the company from issuing longer-term debt. 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. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. 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. Hit him up! The enshittification of apps is real. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. 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. David Z. Morris is CoinDesk's Chief Insights Columnist. 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. First Mover The latest moves in crypto markets, in context. Markets cant function without transparent information flows, full stop. Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. But Stuart Hoegner, Tethers general counsel, said: With respect to reputation, we believe we are seeing the opposite: more and more counterparties are comfortable with Tether and our transparency initiatives and are keen to work with us.. It was news to us.. 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. Hundreds of customers have protested in front of the companys offices alleging mistreatment or fraud. You will receive a link to create a new password via email. var abkw = window.abkw || ''; 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. Tether said that it funnelled roughly half its reserves into commercial paper. The transformation of value in the digital age. ; ; Vergleich; ; ; ; The most recent attestation states the average credit rating of its commercial paper holdings is "A-1" - an. "There is an entire world outside of the US," Ardoino said. A growing swarm of debris in space has led the U.S. government to attempt to set new space hygiene norms, while private companies are also investing in ways to tackle the messy orbital environment. In the NYAG investigation, the company was found to be conducting illegal activities in New York. 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. and other data for a number of reasons, such as keeping FT Sites reliable and secure, A week after its stablecoin briefly lost its 1:1 peg with the U.S. Dollar, Tether's Q1 2022 assurance report shows it has reduced the commercial paper in its USDT reserves by 16.8%.. As of March 31, Tether 's $82 billion reserves were 86% cash and cash equivalents, the rest includes $4 billion in corporate bonds, $3 billion secured loans, and $5 billion other investments like cryptocurrencies . He takes the lead in the majority of the company's communications, while the CEO and CFO stay firmly in the background. 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The latest moves in crypto markets, in context. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. In fact, $30 billion of the Tethers dollar holdings are invested in commercial paper, which makes one of the largest holders of this debt asset class and puts the firm ahead of some top financial firms. Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Cramer stressed he still sees potential for cryptocurrencies to go "mainstream," but believes it's important to lock in at least some gains while they're still there. 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. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. Overall, the studio has a watchful eye. 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. 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. In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. "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. Which countries in the EU are buying the most electric cars? This story was seen first on BeInCrypto Join our Telegram Group and get trading signals, a free trading course and more stories like this on BeInCrypto, Ukraine Latest: Russia Continues Efforts to Encircle Bakhmut, INSIGHT-Before fatal collapse, Turkish building had skirted code thanks to Erdogan policy, In Chicago, adapting electric buses to winters challenges, Ukraine ally Kallas fights for reelection in Estonia vote, Global race to boost electric vehicle range in cold weather. Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans! Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Probing the intersection of crypto and government. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. 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. Crypto Long &. "Right now, owning crypto is what's known as a 'crowded' trade and I don't want you to lose money if this space keeps getting hit by Evergrande's contagion worries," he said. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. About half of Tethers roughly $75 billion in assets, which back USDT, is in commercial paper. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume.
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