Tether Backed by 3.87% Cash | Hacker News Reader

Tether Backed by 3.87% Cash

theblockcrypto.com

36 pointsgrey-area20 comments

It would be best for the HN community if submitters stick to the HN guidelines and not blatantly editorialize the article headline.

I’m bearish on Tether too, but the 76% backing in cash and cash equivalents is a far different picture compared to only focusing on the 3-4% cash.

Yeah, this is far less bad than I thought it would be. I did indeed expect a few %s to be actually backed by something of value. So please change the title.

I'm afraid I don't trust their unspecified 'cash equivalents' which are mostly not cash or anything close. So I think the title is justified and not in any way a distortion of their position. Here is some more detail on the breakdown and this unspecified 'commercial paper':

https://amycastor.com/2021/05/13/tethers-first-breakdown-of-...

Personally if they don't break down what those assets are, I wouldn't trust it's not just 'cryptocurrency assets' rebranded as cash.

These are IOU's, as good as money.

“Commercial paper, in fact, formed the majority of its cash and cash equivalents category, with a 65% share. Fiduciary deposits formed 24% of the category, reverse repo notes 3.60%, treasury bills about 3%, and actual cash only 3.87%.“

Can someone who knows money market funds comment on who the commercial paper counterparties could be?

Most money market funds are required to publish their holdings. For example, here's a Schwab money market fund's holdings: http://hosted.rightprospectus.com/SF/MMD/Fund.aspx?cu=808515...

You can see every counterparty for the fund clearly listed and the dollar amount/date of maturity. Surely an above board holdings vehicle like Tether would publish similar disclosures right?

Interesting link thanks

The stablecoin realm has a long way to go. At least Tether set the bar low.

Wasn't the marketing at the beginning that Tether was a 1:1 Tether:USD ratio? When did they officially announce they were changing to a tokenized asset fund?

Also where is the proof by Tether that indeed, this tokenized asset is more stable than USD?

I suspect this is why heavy hitters have been using Doge as a hedge on dips instead.

Given pas doubts about tether management, the more important number is what % of the tether issued is backed at all, now how it is backed. The transparency report [1] shows that they have 0.2% more assets that liabilities (in USD) which gives me more confidence than anything else.

[1] https://wallet.tether.to/transparency

nit: 3.87% times 75.85% which is 2.94% cash

The mini pie chart is a breakout of only one of the slices of the bigger pie chart

That's nice that tether management gets to keep all that interest!

Title should be “Tether reveals it is capitalized like any bank”

Yes, and as soon as there is a bank run the bank stops giving people their money. Just like what will happen if everyone wants their tethers in USD at the same time.

"...but not regulated like any bank"

Tether is in fact not a bank, though? It is a service that in theory ports USD to block chains for ease of transaction. The last thing I would want for such a service would be to treat my money like it was a deposit at a non-FDIC insured investment bank.

Flagged for sensational and completely misleading headline

These are IOU's sir, as good as money.

Depends who the IOUs are from. Money is also basically just an IOU.

That seems unbelievably high

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