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Comment by asah | Hacker News Reader

Tether is 60B in a crypto market of $1-2+T, and there's plenty of other stablecoins to replace it.

So Tether's founders are shady? Bitcoin was founded by a shadowy figure and nobody knows if his early tokens will reappear on the market someday, making him a bazillionaire and the rest of us take a 20% haircut (vs the float, not the total).

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> Tether is 60B in a crypto market of $1-2+T, and there's plenty of other stablecoins to replace it.

That’s not how this works. Tether represents the vast majority of trading volume. If it turns out that it’s worthless, it will be catastrophic.

Also you’re conflating market cap with hard assets. Apple is a $2T company but if you tried to sell $60B of AAPL in a short period of time, it would collapse.

Case in point, Archegos was a $10B hedge fund but $194B of market cap loss was attributed to their collapse https://www.bloomberg.com/news/articles/2021-04-09/rattled-a...

Stand corrected: https://coinmarketcap.com/

"The total crypto market volume over the last 24 hours is $85.97B, which makes a 6.53% decrease. The total volume in DeFi is currently $5.78B, 6.73% of the total crypto market 24-hour volume. The volume of all stable coins is now $69.59B, which is 80.95% of the total crypto market 24-hour volume."

The other large stablecoins are trading <$2B/day vs tether, so indeed you're correct.

As for Apple, sure it would slam the market temporarily, but why wouldn't it quickly recover?

The issue is that Tether makes up not just a significant portion of but almost all of the trading volume of the entire cryptocurrency market. If something happens and Tether goes tits up the entire market goes with it since effectively all of the volume on nearly every exchange (excluding a few US exchanges) is done in USDT trading pairs.

Eventually the market will sort itself out but that initial bloodbath could cause serious financial issues and the recovery could take years.

https://crypto-anonymous-2021.medium.com/the-bit-short-insid...

Being that the fed buys twice the entire tether market cap in bonds ($120B) every month, their "systemic risk" talk does seem a bit overblown.

I fully recognize the tether collateral situation is shady and could blow up. It also could remain shady and not blow up for a very very long time. It'd be a big deal for crypto but I'm not convinced it would be for the wider world.

I hate sounding like the maximalist who calls everything FUD, but it's really hard not to here

The bigger concern is trading volume. I made another comment in chain about this but the short of it is that while Tether only makes up a 20th of the entire market cap, it makes up almost all of the trading volume on exchanges nowadays. If Tether catastrophically fails it'll pull the entire market with it and that'll have serious consequences now that there is institutional involvement in the cryptocurrency market.

The broader goal here whenever this is brought up is to push people away from Tether towards other less problematic stablecoins.

This isn't FUD, it's a call to action for communities and exchanges to start minimising their exposure to the risks that the current Tether situation poses.

I guess my point is: Not that they'd ever do this, but if the Fed were really concerned they could easily bail out tether without doing anything outside of the "norm".

> This isn't FUD, it's a call to action for communities and exchanges to start minimising their exposure to the risks that the current Tether situation poses.

This seems a fair description of your posts. It does not seem to describe the Fed governor's statement

This Fed speak for we need to regulate Tether IMO. Of course they don't really believe Tether is a systemic risk.

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