That way Tether prints USDT out of thin air and makes an income from a sum of money they largely don’t hold while the exchanges get to hold the bulk of fiat that gets deposited. The “commercial paper” could just be these loans owed by exchanges via a seperate shell company.
How existing eurodollar system works… yet people constantly whine about USDT… lol
Tether is essentially crypto with all the properties of fiat except the good ones. A tool that allows people to trade and avoid triggering tax events in certain jurisdictions because it is still technically a cryptocurrency.
Sure, _maybe_ for a US bank with another US bank within the US (you have to ignore collateral rehypothication, which in practice you really can't ignore…).
But this is not how it works with an Indonesian bank dealing with a Chinese bank when they denominate their OTC bilateral transactions in USD…
Unless you think that their respective governments are issuing USD and not just those banks swapping USD liabilities with one another, as well as unless you also think that those respective governments are guaranteeing USD deposits in those banks are fully backed by USD in a bank account somewhere and not just mostly USD denominated "assets" (future USD cashflow on those swapped liabilities)…
> A tool that allows people to trade and avoid triggering tax events in certain jurisdictions
Which is not even unique to Tether… who operates just like any other bank in eurodollar markets (and withdrawls from blockchains to tradfi fiat will trigger easily taxable events, $100k min with USDT).
Like i said in another comment, i fully expect peoples minds to be blown (if they are currently clutching their pearls with USDT) with an on chain entity does exactly what tether does but has no physical offices nor employees because its a DAO…
How does Tether prop up the value of USDT if there is a mass sell off into fiat? Is this the duty of the exchanges? Does Tether buy USDT off exchanges in order to push up price when there is a sell off? How big a sell off can they contain?
How would a DAO offer the same promises of “backing” that made USDT possible without government issued stable-coins?
SSDD with pretty much every bank/branch not domiciled in the US that has accounts denominated in USD… they make the same promises
> How does Tether prop up the value of USDT if there is a mass sell off into fiat? Is this the duty of the exchanges? Does Tether buy USDT off exchanges in order to push up price when there is a sell off? How big a sell off can they contain?
As long as Tether continues to have higher cash flows than many tradfi banks operating in eurodollar markets now (esp in smaller countries), you'd be better off asking these questions about those other banks now…
> How would a DAO offer the same promises of “backing” that made USDT possible without government issued stable-coins?
On chain liabilities between DAOs and centralized orgs on chain denominated in decentralized uncollateralized stablecoins, and the desire for people to purchase such liabilities at discounts with fluctuation price of the stablecoins that freely float against things like USDT/USDC/DAI/TUSD/etc (not too different from the incentives involved in eurodollar futures markets).