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Does it even need that? ETFs can keep their price stable with as few as five or ten entities being allowed to trade the underlying basket of assets for the ETF.
by cesarb 9y ago
Does it even need that? ETFs can keep their price stable with as few as five or ten entities being allowed to trade the underlying basket of assets for the ETF. Those who aren't allowed to directly exchange the assets for the ETF can instead trade with those who are allowed, or trade with someone who can trade with them. There's no need for everyone to be able to deal directly with the ETF issuer, and the same should apply to USDT.
- JumpCrisscross 9y ago> There's no need for everyone to be able to deal directly with the ETF issuer But there is the need for everyone to trust the ETF manager. Authorised participants (APs) must trust they can redeem ETF units for a basket of the underlying shares and vice versa. Other market participants, in turn, must trust that process to manage tracking risk. ETF managers earn that trust by contractually guaranteeing APs' creation/redemption rights, being regularly audited like normal companies, being regulated like securities companies, and having their holdings vouched for by other market participants, e.g. banks, clearing and settlement services, et cetera. Literally none of the preceding apply to Bitfinex nor Tether. More broadly, a structure like Tether is inherently incompatible with anti-money laundering. No jurisdiction will let a bank say "these $2 billion are held by unknown beneficial owners." If we wanted that, we'd just re-authorise numbered, i.e. anonymous, bank accounts.