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The issue is if Tether continues to grow, as it has been, it may become too big to fail. That is, Tether loses its peg, $X dollars go missing, and firms start

by dannyw 5y ago

The issue is if Tether continues to grow, as it has been, it may become too big to fail. That is, Tether loses its peg, $X dollars go missing, and firms start to fail like dominos, even outside the crypto sphere. Tether is far from that level but theres nothing stopping its growth. The solution isnt to ban tether, but rather launch central bank stablecoins. Put the official USD as a ERC20 token.

anon9001 5y ago
> The issue is if Tether continues to grow, as it has been, it may become too big to fail. If this happens, we need to let it fail. I'd be furious to see the fed bail out USDT to make sure the crypto market stays "stable". > That is, Tether loses its peg, $X dollars go missing, and firms start to fail like dominos, even outside the crypto sphere. If firms fall because they bet too hard on USDT, they deserve to fall. Tether has not offered sufficient evidence that they are fully backed, so that risk needs to be accounted for by the firms that use USDT. > Tether is far from that level but theres nothing stopping its growth. Hopefully what's stopping that growth are better stablecoins with alternative risk profiles that are more favorable to investors. > The solution isnt to ban tether, but rather launch central bank stablecoins. Put the official USD as a ERC20 token. That's still just trading one set of risks for another, which is fine. Having multiple stablecoin options is good.
- cinquemb 5y ago
  > If this happens, we need to let it fail. I'd be furious to see the fed bail out USDT to make sure the crypto market stays "stable". We already know its going to happen: some "blessed" TBTF tradfi bank is going to have some massive tail risk exposure on chain and will go insolvent unless FRBNY steps in so that they can get more tethers minted for them on chain. What they wont be able to do is halt trading for all the derivatives on all the dex's on chain to help minimize the cost of that bailout.
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augstein 5y ago
At current prices, Tethers market cap is only about 10% of Bitcoins and about 5% of the whole crypto market cap.
- runeks 5y ago
  Market cap is the wrong metric to use. Tether is debt. Its entire market cap is redeemable in USD. It’s not possible to redeem the market cap of e.g. Bitcoin.
  - jkhdigital 5y ago
    Not really, Tether’s terms don’t provide much in the way of redeemability. It’s quite probable that most of the Tethers already minted never had an actual dollar behind them anyway.
    - runeks 5y ago
      A Tether is redeemable. The terms say you may experience a delay, due to liquidity issues. But it’s still redeemable. Issuing a token, and claiming it will always be worth $1, simply by hoping that someone, somewhere will buy them for $1 is fraud.
- deleted 5y ago
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by dannyw 5y ago

anon9001 5y ago

> The issue is if Tether continues to grow, as it has been, it may become too big to fail. If this happens, we need to let it fail. I'd be furious to see the fed bail out USDT to make sure the crypto market stays "stable". > That is, Tether loses its peg, $X dollars go missing, and firms start to fail like dominos, even outside the crypto sphere. If firms fall because they bet too hard on USDT, they deserve to fall. Tether has not offered sufficient evidence that they are fully backed, so that risk needs to be accounted for by the firms that use USDT. > Tether is far from that level but theres nothing stopping its growth. Hopefully what's stopping that growth are better stablecoins with alternative risk profiles that are more favorable to investors. > The solution isnt to ban tether, but rather launch central bank stablecoins. Put the official USD as a ERC20 token. That's still just trading one set of risks for another, which is fine. Having multiple stablecoin options is good.

cinquemb 5y ago
> If this happens, we need to let it fail. I'd be furious to see the fed bail out USDT to make sure the crypto market stays "stable". We already know its going to happen: some "blessed" TBTF tradfi bank is going to have some massive tail risk exposure on chain and will go insolvent unless FRBNY steps in so that they can get more tethers minted for them on chain. What they wont be able to do is halt trading for all the derivatives on all the dex's on chain to help minimize the cost of that bailout.

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augstein 5y ago

At current prices, Tethers market cap is only about 10% of Bitcoins and about 5% of the whole crypto market cap.

runeks 5y ago
Market cap is the wrong metric to use. Tether is debt. Its entire market cap is redeemable in USD. It’s not possible to redeem the market cap of e.g. Bitcoin.
- jkhdigital 5y ago
  Not really, Tether’s terms don’t provide much in the way of redeemability. It’s quite probable that most of the Tethers already minted never had an actual dollar behind them anyway.
  - runeks 5y ago
    A Tether is redeemable. The terms say you may experience a delay, due to liquidity issues. But it’s still redeemable. Issuing a token, and claiming it will always be worth $1, simply by hoping that someone, somewhere will buy them for $1 is fraud.
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