4 ms·

they have reports on their site by external parties that check their funds. anyway they have a lot of bonds etc. we don't care when banks only have 50% of thei

by tiku 4y ago

they have reports on their site by external parties that check their funds. anyway they have a lot of bonds etc. we don't care when banks only have 50% of their client's money but we do when it's tether for some reason.

surfmike 4y ago
That’s because of FDIC. Nothing will save you if tether peg fails.
greenthrow 4y ago
This is an extremely disingenuous argument on so many levels. 1) Banks don't run their own currencies. 2) Banks don't claim to have a dollar on hand for every dollar in account balances at all times. 3) Banks are FDIC insured. Even if the bank collapses, you will get your money back. Crypto bros, it's time to stop defending Tether. It will collapse and you will look just as foolish as the people who backed Luna and Safemoon and all the other scams.
- beojan 4y ago
  > 1) Banks don't run their own currencies. Some do, namely the Scottish and Northern Irish note issuing banks. These have to be fully backed though. https://www.bankofengland.co.uk/banknotes/scottish-and-northern-ireland-banknotes https://www.bankofengland.co.uk/banknotes/scottish-and-north...
deleted 4y ago
[deleted]
beefield 4y ago
If the value of assets of a bank drops under certain limits [1], regulators can and will take action. To be clear, every single bank that is currently alive (and regulated by relevant western authorities) has assets way more than what the deposits are worth. They may not be liquid assets, but they are there. [1] you may want to search for terms like "regulatory capital" or "capital adequacy"
- elliekelly 4y ago
  And banks segregate assets. If the bank entity goes under the customer deposits shouldn’t be at risk and vice versa. Tether, on the other hand, is a whole big mess of co-mingled corporate and customer cash.
  - lxgr 4y ago
    > And banks segregate assets. That's inaccurate. The entire idea of a bank is to connect supply of and demand for money across heterogenous creditors and debtors, which includes retail depositors and commercial lenders. There isn't a "secure savings account department" and a "risky commercial loans department"; it's all on the same balance sheet. What does protect retail depositors (to a certain limit) are schemes like FDIC. Any retail deposits not covered by that, and any commercial deposits, will receive a haircut when the bank goes under. In the EU and UK, this has happened at least twice in the last few years.
    - elliekelly 4y ago
      When I say “segregate assets” I mean the bank’s assets from the customers’ assets. Tether comingles Tether Corp assets with Tether customer assets. That’s a big no-no. If tether goes under its much more difficult to discern which dollar is a Tether dollar vs a customer’s dollar. Edit: Re-reading your comment I understand the confusion. I’m assuming Tether, if it were a bank, would function and be regulated like the Trust Department of a bank.
      - lxgr 4y ago
        There really is no such separation between "the bank's assets" and "the customers' assets". A bank has liabilities (customer deposits, financial contacts with other banks etc) and assets (loans, cash in a vault, their central bank balance, real estate of their office locations, office furniture etc). These are absolutely all on the same balance sheet, and the difference between the two is the bank's equity. Take a look at the Fed's balance sheet, for example: It explicitly lists the land that its branches are located on, and owned by it, as an asset [1]. What's regulated is, among other things, the required equity in relation to total assets/liabilities (capital adequacy requirements) and a high enough ratio of liquid reserves to total liabilities to handle various stress scenarios (liquidity requirements). Importantly, and this cannot be stressed enough in this context, Tether is not a regulated bank. [1] https://www.federalreserve.gov/monetarypolicy/bst_fedsbalancesheet.htm https://www.federalreserve.gov/monetarypolicy/bst_fedsbalanc...

by tiku 4y ago

surfmike 4y ago

That’s because of FDIC. Nothing will save you if tether peg fails.

greenthrow 4y ago

This is an extremely disingenuous argument on so many levels. 1) Banks don't run their own currencies. 2) Banks don't claim to have a dollar on hand for every dollar in account balances at all times. 3) Banks are FDIC insured. Even if the bank collapses, you will get your money back. Crypto bros, it's time to stop defending Tether. It will collapse and you will look just as foolish as the people who backed Luna and Safemoon and all the other scams.

beojan 4y ago
> 1) Banks don't run their own currencies. Some do, namely the Scottish and Northern Irish note issuing banks. These have to be fully backed though. https://www.bankofengland.co.uk/banknotes/scottish-and-northern-ireland-banknotes https://www.bankofengland.co.uk/banknotes/scottish-and-north...

deleted 4y ago

[deleted]

beefield 4y ago

If the value of assets of a bank drops under certain limits [1], regulators can and will take action. To be clear, every single bank that is currently alive (and regulated by relevant western authorities) has assets way more than what the deposits are worth. They may not be liquid assets, but they are there. [1] you may want to search for terms like "regulatory capital" or "capital adequacy"

elliekelly 4y ago
And banks segregate assets. If the bank entity goes under the customer deposits shouldn’t be at risk and vice versa. Tether, on the other hand, is a whole big mess of co-mingled corporate and customer cash.
- lxgr 4y ago
  > And banks segregate assets. That's inaccurate. The entire idea of a bank is to connect supply of and demand for money across heterogenous creditors and debtors, which includes retail depositors and commercial lenders. There isn't a "secure savings account department" and a "risky commercial loans department"; it's all on the same balance sheet. What does protect retail depositors (to a certain limit) are schemes like FDIC. Any retail deposits not covered by that, and any commercial deposits, will receive a haircut when the bank goes under. In the EU and UK, this has happened at least twice in the last few years.
  - elliekelly 4y ago
    When I say “segregate assets” I mean the bank’s assets from the customers’ assets. Tether comingles Tether Corp assets with Tether customer assets. That’s a big no-no. If tether goes under its much more difficult to discern which dollar is a Tether dollar vs a customer’s dollar. Edit: Re-reading your comment I understand the confusion. I’m assuming Tether, if it were a bank, would function and be regulated like the Trust Department of a bank.
    - lxgr 4y ago
      There really is no such separation between "the bank's assets" and "the customers' assets". A bank has liabilities (customer deposits, financial contacts with other banks etc) and assets (loans, cash in a vault, their central bank balance, real estate of their office locations, office furniture etc). These are absolutely all on the same balance sheet, and the difference between the two is the bank's equity. Take a look at the Fed's balance sheet, for example: It explicitly lists the land that its branches are located on, and owned by it, as an asset [1]. What's regulated is, among other things, the required equity in relation to total assets/liabilities (capital adequacy requirements) and a high enough ratio of liquid reserves to total liabilities to handle various stress scenarios (liquidity requirements). Importantly, and this cannot be stressed enough in this context, Tether is not a regulated bank. [1] https://www.federalreserve.gov/monetarypolicy/bst_fedsbalancesheet.htm https://www.federalreserve.gov/monetarypolicy/bst_fedsbalanc...