4 ms·

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

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...
- elliekelly 4y ago
  No, fiduciary assets are segregated. See, 12 USC 92a(c) and corresponding implementing regulation 12 CFR §9.13(b). The Fed is not a good example of how banks typically operate or how banking regulations are typically implemented because the Fed is not a typical bank. 12 USC 92a: https://www.law.cornell.edu/uscode/text/12/92a https://www.law.cornell.edu/uscode/text/12/92a 12 CFR §9.13: https://www.law.cornell.edu/cfr/text/12/9.13 https://www.law.cornell.edu/cfr/text/12/9.13
  - lxgr 4y ago
    Regular bank deposits are not fiduciary assets though, no? If they were, what would be the point of FDIC? Securities are a different story – in that case, a bank or brokerage really only acts as a custodian for the accountholder, not adding them to their balance sheet.

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...

elliekelly 4y ago
No, fiduciary assets are segregated. See, 12 USC 92a(c) and corresponding implementing regulation 12 CFR §9.13(b). The Fed is not a good example of how banks typically operate or how banking regulations are typically implemented because the Fed is not a typical bank. 12 USC 92a: https://www.law.cornell.edu/uscode/text/12/92a https://www.law.cornell.edu/uscode/text/12/92a 12 CFR §9.13: https://www.law.cornell.edu/cfr/text/12/9.13 https://www.law.cornell.edu/cfr/text/12/9.13
- lxgr 4y ago
  Regular bank deposits are not fiduciary assets though, no? If they were, what would be the point of FDIC? Securities are a different story – in that case, a bank or brokerage really only acts as a custodian for the accountholder, not adding them to their balance sheet.