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I've sold Tether for both USD and CAD without any issue or significant delay. What are the difficulties the author is referencing? (Asking genuinely, not arguin

I've sold Tether for both USD and CAD without any issue or significant delay. What are the difficulties the author is referencing? (Asking genuinely, not arguing.)

aabhay 5y ago
How much/which exchange? The volume and jurisdiction matters.
Shosty123 5y ago
Yeah, I'm not sure. Even if a direct CAD pairing wasn't available, I've always been able to exchange my tokens for USDT and then exchange that for CAD and eTransfer it to my bank.
__zack 5y ago
The difference is between exchanging tether and redeeming tether. Exchanging tether is easy as long as there’s a counterparty willing to buy your tether in exchange for USD. But in principle you should be able to go to the “tether mint”, give them your tethers, and they redeem them 1:1 to USD. Apparently this is not very straightforward to do. This podcast episode covers the topic well: https://anchor.fm/cas-piancey/episodes/Tether-A-Stable-Discussion-erhp88 https://anchor.fm/cas-piancey/episodes/Tether-A-Stable-Discu...
- londons_explore 5y ago
  It would seem likely that the tether mint participates in some exchanges and buys or sells to keep the price stable. This theory is backed up more by the fact the tether price history matches with a script in someone's basement that occasionally crashes and it takes a few hours to repair, during which the price wanders before being clamped 1:1 again. That's functionally identical to going to the mint directly, and means the mint doesn't require any customer service etc.
- deleted 5y ago
  [deleted]
- question11 5y ago
  USDC mostly solves this as it is not too hard to get a circle account.
22c 5y ago
Yeah, I took issue with that statement. >In practice they’re quite difficult to convert to real money. In practice they're quite easy to convert to real money, they're often the most liquid pairs available and extremely easy to convert close to 1:1 for another USD stablecoin as well, if that's your bag. I have no idea how easy it is in practice to redeem 1 USDT for 1 USD, but it's very easy to convert even a marginally large sum of USDT to "real money" (fiat). Where it can get difficult is withdraw limits on centralised exchanges, or overly cautious (hoop jumping) KYC processes. This is regardless of whether you're using USD, CAD or any other currency.
pg_bot 5y ago
https://bennettftomlin.com/2021/06/21/a-non-exhaustive-list-of-bitfinex-and-tethers-misdeeds-and-red-flags/ https://bennettftomlin.com/2021/06/21/a-non-exhaustive-list-...
cranium 5y ago
It's difficult to convert to real money if you are not using an exchange – and I guess the author is actively avoiding those. I think there are very few anonymous crypto-to-cash conversions due to regulations on money-laundering.
brodo 5y ago
https://www.youtube.com/watch?v=-whuXHSL1Pg https://www.youtube.com/watch?v=-whuXHSL1Pg
arcticbull 5y ago
The question is about redemptions with Tether Inc, not trading USDT for USD to other traders. Tether should be redeemable for dollars by redemption at Tether Inc, but of course it's not, since they only have 3% of the dollars required to fulfill those redemptions.
- anonymoushn 5y ago
  If you KYC with Tether and send them at least 100k USDT, it's redeemable for 99.9 cents. You can typically get like 15bps more on the open market.
  - arcticbull 5y ago
    Depends, if they see fit to deem you an "authorized participant" (at their sole discretion). Further, they have to decide to actually honor your redemption (they do not need to) and not to delay it an arbitrary amount of time (as is their right). [edit] Also, importantly, US persons are not permitted to redeem USDT. This is all in their terms of service. And of course, you have to not exceed their liquidity buffer because they themselves admit to only being 3% backed. Thus far, I don't believe anyone has actually shown any proof that they have actually carried out a redemption of USDT tokens via Tether. Most people who claim to simply traded it.
Animats 5y ago
Tether will work until the day comes when there is a net outflow from Tether. Then it will all come apart, because the backing assets aren't all there. Like Madoff's fund.
- patricius 5y ago
  ... or fractional reserve banking
  - Animats 5y ago
    No, no, no. Cryptocurrency fans keep making that up. In fractional reserve banking, the bank uses deposits to make loans. The loans have collateral behind them, often real estate. There are real assets backing the loans. That's not how Tether works. Tether is supposedly invested in "commercial paper", but that has to be fake. If they were really buying commercial paper, they'd be in the top 10 commercial paper buyers. The trading desks that trade short term commercial paper would see billions of dollars of transactions from Tether. Traders report they're not seeing that.
    - 22c 5y ago
      >The loans have collateral behind them, often real estate. There's still an assumption that the real estate can be liquidated 1:1 for the loan value, though. I think the difference is not so much the collateral, but the insurance.
      - Animats 5y ago
        No, the assumption is that the collateral can be liquidated at (1-x%) of loan value, and that the bank has x% in loan reserve capital to make up the losses.
        22c 5y ago
        Yes, you are quite correct. I believe the point still stands, that there is nothing inherently pegging collateral + reserve to it's loan value. If the risk of default is too high, banks usually won't give out loans without some form of insurance.

I've sold Tether for both USD and CAD without any issue or significant delay. What are the difficulties the author is referencing? (Asking genuinely, not arguing.)

aabhay 5y ago

How much/which exchange? The volume and jurisdiction matters.

Shosty123 5y ago

Yeah, I'm not sure. Even if a direct CAD pairing wasn't available, I've always been able to exchange my tokens for USDT and then exchange that for CAD and eTransfer it to my bank.

__zack 5y ago

The difference is between exchanging tether and redeeming tether. Exchanging tether is easy as long as there’s a counterparty willing to buy your tether in exchange for USD. But in principle you should be able to go to the “tether mint”, give them your tethers, and they redeem them 1:1 to USD. Apparently this is not very straightforward to do. This podcast episode covers the topic well: https://anchor.fm/cas-piancey/episodes/Tether-A-Stable-Discussion-erhp88 https://anchor.fm/cas-piancey/episodes/Tether-A-Stable-Discu...

londons_explore 5y ago
It would seem likely that the tether mint participates in some exchanges and buys or sells to keep the price stable. This theory is backed up more by the fact the tether price history matches with a script in someone's basement that occasionally crashes and it takes a few hours to repair, during which the price wanders before being clamped 1:1 again. That's functionally identical to going to the mint directly, and means the mint doesn't require any customer service etc.
deleted 5y ago
[deleted]
question11 5y ago
USDC mostly solves this as it is not too hard to get a circle account.

22c 5y ago

Yeah, I took issue with that statement. >In practice they’re quite difficult to convert to real money. In practice they're quite easy to convert to real money, they're often the most liquid pairs available and extremely easy to convert close to 1:1 for another USD stablecoin as well, if that's your bag. I have no idea how easy it is in practice to redeem 1 USDT for 1 USD, but it's very easy to convert even a marginally large sum of USDT to "real money" (fiat). Where it can get difficult is withdraw limits on centralised exchanges, or overly cautious (hoop jumping) KYC processes. This is regardless of whether you're using USD, CAD or any other currency.

pg_bot 5y ago

https://bennettftomlin.com/2021/06/21/a-non-exhaustive-list-of-bitfinex-and-tethers-misdeeds-and-red-flags/ https://bennettftomlin.com/2021/06/21/a-non-exhaustive-list-...

cranium 5y ago

It's difficult to convert to real money if you are not using an exchange – and I guess the author is actively avoiding those. I think there are very few anonymous crypto-to-cash conversions due to regulations on money-laundering.

brodo 5y ago

https://www.youtube.com/watch?v=-whuXHSL1Pg https://www.youtube.com/watch?v=-whuXHSL1Pg

arcticbull 5y ago

The question is about redemptions with Tether Inc, not trading USDT for USD to other traders. Tether should be redeemable for dollars by redemption at Tether Inc, but of course it's not, since they only have 3% of the dollars required to fulfill those redemptions.

anonymoushn 5y ago
If you KYC with Tether and send them at least 100k USDT, it's redeemable for 99.9 cents. You can typically get like 15bps more on the open market.
- arcticbull 5y ago
  Depends, if they see fit to deem you an "authorized participant" (at their sole discretion). Further, they have to decide to actually honor your redemption (they do not need to) and not to delay it an arbitrary amount of time (as is their right). [edit] Also, importantly, US persons are not permitted to redeem USDT. This is all in their terms of service. And of course, you have to not exceed their liquidity buffer because they themselves admit to only being 3% backed. Thus far, I don't believe anyone has actually shown any proof that they have actually carried out a redemption of USDT tokens via Tether. Most people who claim to simply traded it.

Animats 5y ago

Tether will work until the day comes when there is a net outflow from Tether. Then it will all come apart, because the backing assets aren't all there. Like Madoff's fund.

patricius 5y ago
... or fractional reserve banking
- Animats 5y ago
  No, no, no. Cryptocurrency fans keep making that up. In fractional reserve banking, the bank uses deposits to make loans. The loans have collateral behind them, often real estate. There are real assets backing the loans. That's not how Tether works. Tether is supposedly invested in "commercial paper", but that has to be fake. If they were really buying commercial paper, they'd be in the top 10 commercial paper buyers. The trading desks that trade short term commercial paper would see billions of dollars of transactions from Tether. Traders report they're not seeing that.
  - 22c 5y ago
    >The loans have collateral behind them, often real estate. There's still an assumption that the real estate can be liquidated 1:1 for the loan value, though. I think the difference is not so much the collateral, but the insurance.
    - Animats 5y ago
      No, the assumption is that the collateral can be liquidated at (1-x%) of loan value, and that the bank has x% in loan reserve capital to make up the losses.
      - 22c 5y ago
        Yes, you are quite correct. I believe the point still stands, that there is nothing inherently pegging collateral + reserve to it's loan value. If the risk of default is too high, banks usually won't give out loans without some form of insurance.