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. Your weekly wrap of Web3 news and trends. 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. "In the end, this industry is more than $2 trillion and it's important to have clear guidelines and clear rules and so on. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. 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. "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. News and analysis for the professional investor. 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. Sign up for The Node, our daily newsletter bringing you the biggest crypto news and ideas. You will receive a link to create a new password via email. analyse how our Sites are used. When Tether launched in 2014, it said every tether coin was fully backed by US dollars in bank accounts. Chinese real estate developers are some of the world's biggest issuers of commercial paper. 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. He holds Bitcoin, Ethereum, and small amounts of other crypto assets. Thus, it has grown 19-fold in a matter of two dozen months. var abkw = window.abkw || ''; 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. Hoegner said the commercial paper reserves included amounts held internationally with further sub-custody at major global institutions. So while Evergrande may not be on the books, the concern is that the commercial paper may be from other real estate firms. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. The biggest crypto news and ideas of the day. CNBC's Jim Cramer urged investors who have gains in their cryptocurrency portfolios to take some profits, saying Monday he believes digital currencies are likely to face more weakness related to struggling Chinese property developer Evergrande. All Rights Reserved. CoinDesk journalists are not allowed to purchase stock outright in DCG. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. 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. Which countries have banned TikTok, and why? Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. Before falling into a major crisis, Chinese property developers had issued commercial paper worth 3.6 trillion yuan ($556 billion) in 202020% higher from 2019. 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. 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. 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 published its first Reserves Breakdown in March 2021. madcap@cnbc.com. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Chinese real estate developers are some of the worlds biggest issuers of commercial paper. 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. In total, Tether holds 52% US Treasury bonds, 37% commercial paper, with the remainder in cash and money market funds. Got a confidential news tip? Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. 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. 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. We do not give personalized investment advice or other financial advice. Markets cant function without transparent information flows, full stop. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. His role is much broader than tech chief. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . cookies 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. In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. In response to the Bloomberg BW report, it released a blog post claiming that the report is spreading misinformation.. 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. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. He also shares his expectations on stablecoin regulation and competition. "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. Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. The Evergrande Group is the second-largest property developer in China by sales. Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. With Tether we are welcoming all that. 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.. The biggest crypto news and ideas of the day. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. What does one have to do with the other? Get this delivered to your inbox, and more info about our products and services. Who to fire? David Z. Morris is CoinDesk's Chief Insights Columnist. The tumble appears to have been triggered by the mounting problems at embattled property giant China. This is not the first time concerns about the true value of USDT have emerged. How much of it is Chinese or specifically from Evergrande is unclear. "There is an entire world outside of the US," Ardoino said. Head to consensus.coindesk.com to register and buy your pass now. 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. 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. "So if A1 commercial paper rated by a US Agency is considered safe [then] why is where the issuer located matters?". The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. The Chinese real-estate giant is facing down $300 billion in debt that it cant pay back. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. He takes the lead in the majority of the company's communications, while the CEO and CFO stay firmly in the background. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". 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. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. But these have frequently raised more questions than answers. 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. Head to consensus.coindesk.com to register and buy your pass now. ; ; Vergleich; ; ; ; How Ethereum's evolution impacts crypto markets. Tether said that it funnelled roughly half its reserves into commercial paper. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 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. "Tether said they have no Evergrande exposure," Cramer acknowledged. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Cash made up only 2.9 per cent, according to the companys disclosure. 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. "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.". Tether grants you a limited license to access and make personal use of the Site. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. Tether has been beset by transparency concerns in the past as well. 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. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. 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. 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. Smart navigation app uses 3D sound to guide blind people. Our Standards: The Thomson Reuters Trust Principles. We want to hear from you. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. Can it be liquidated to meet redemptions? See here for a complete list of exchanges and delays. 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. The downgrade from A to AA applies both to the bonds and their issuer rating. 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. CNBC's Jim Cramer said Monday investors should take profits in their crypto holdings. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Probing the intersection of crypto and government. Tether's USDT remains the dominant stablecoin in the market despite the FUD surrounding the coin. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. You can subscribe to get the full newsletter here. recently accused of violating securities laws. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. 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. 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 . A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. 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 . 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. 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 or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. 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 . While the embattled housing giant ultimately made its scheduled payment of $148 million, questions persist about the long-term prospects for it and other real estate developers in China. He is also now CTO of cryptocurrency exchange Bitfinex. Debate swirls about whether that impact would spread beyond China, but theres broad agreement that impact within the country would be near catastrophic. Ardoino joined Tether back in late 2015 as a developer before being appointed chief technology officer around a year later. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. For critics of Tether, the new economy of digital assets is based on the worlds oldest profession: real estate speculation. 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 . To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. Tether has faced scrutiny from authorities and investigators in the past. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. 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. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. 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. This was later repaid by Bitfinex. Given Tethers record to this point, that may take a while. Well, think of a detective in a movie who takes a corkboard, some photos and a lot of white strings to put all the parts of a story together. The company has more than $300 billion in total liabilities and recently warned investors it may default on its debts. "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. "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. Evergrande has now had to suspend trading of. Neither Tether nor Bitfinex admitted wrongdoing. This license does not include nor permit your resale or commercial use of the Site or its contents. The $1.1tn commercial paper market is vital for large companies looking to raise cash for short-term needs such as payroll and inventories. Cramer has a position in ether, which runs on the Ethereum blockchain. Just last month, Bitfinex, Tethers parent company, tried to block CoinDesk from accessing the specifics of its commercial paper holdings by filing a petition in New York Supreme Court. 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. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. The transformation of value in the digital age. 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. 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.