3 ms·

Who’s making 5% risk free? Can you point me in their direction?

• Scoundreller 7y ago
  You take some risk while externalizing the risk of insolvency to your customers. It’s what every insurance company and bank does. Or if you don’t want to do that, put it in treasuries or something and take your 1,2,3% of whatever it may be. Tether could have replicated either strategy, but seems to not have. They could also have profited from those that lost their keys (it happens).
  • FreeRadical 7y ago
    They would need access to a broker to invest in treasuries and pass KYC/AML. Which treasury broker would onboard them if they struggled to get a bank?
  • tinco 7y ago
    Even treasuries are not risk free, nor are they unbounded. Tether is trying to play in the big league, I'm not certain what the rules are, but I'm pretty sure making 1%-2% annually on the float is a pretty good deal, and that might even be a conservative estimate. In addition you have to keep in mind that it is also about absolute numbers. No one invested these billions with them, no one is charging them some kind of relative rent. Every dollar is profit. If you could make 0.001% off storing 5 billion, that would still be an attractive business model.