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I think it just pushes these markets to switch to usdc, which is a good thing as (1) making crypto more tied to audited assets (2) make redemption subject to AM

by ivalm 4y ago

I think it just pushes these markets to switch to usdc, which is a good thing as (1) making crypto more tied to audited assets (2) make redemption subject to AML.

hestefisk 4y ago
Agree. People bought tether to have a stable store of value so it will only push funds into USDC or similar.
vkou 4y ago
Assuming that Tether is a fraud...: The problem is that Tether is either worth $1 (Current status quo), or $0 (When everyone loses faith in it.) It will transition from one to the other at... Some point. And there will, by definition, be a lot of bagholders who have not managed to redeem it in time. The rest of the ecosystem will not have a soft landing from that. Oh, sure, anyone who bought USDC will be fine, but all the non-pegged coins will be in for a very, very rough ride.
- loopdoend 4y ago
  How is $0 even possible? It seems to me it must be at least partially backed.
  - deleted 4y ago
    [deleted]
  - diab0lic 4y ago
    Everyone withdrawing when they have money gets $1, everyone trying to withdraw after insolvency hits gets $0. If this were to occur the secondary market would bear some small but nonzero value representing the off chance that it is a liquidity issue and not a solvency issue.
  - dragontamer 4y ago
    Let's say there is 60 Billion total Tether, but only $30 Billion backing it. As soon as people realize the issue, they will trade USDT for USD. Tether will defend the peg, spending $30 Billion to hold it's value at 1 USDT for $1. Thirty Billion later, the overall situation is 30 Billion USDT remaining, but the bank vaults are empty nothing left over to defend the peg. At this point, USDT snaps to $0 very quickly.
  - ericd 4y ago
    I imagine that if it's partially backed, and everyone tries to redeem, and they try to defend the peg in order to not admit that it's insolvent, then they'll redeem at $1 until they can't, at which point it will be worth ~$0.
    - Galanwe 4y ago
      Just trying to be picky: The most likely scenario is that Tether is _overall_ solvent, though not in liquid assets. What would likely happen in case of a bank run is: 1) Tether will defend the peg and redeem at $1 2) Tether will freeze redeems because of limited liquidity 3) Tether will fill face huge pressure and regulatory threats 4) Some people will want to exit USDT immediately at a discounted price (say $0.5), while some others will buy discounted USDT hoping once Tether solves its liquidity issues or bankrupt they could get more than $0.5 per USDT. TLDR: USDT will most likely not go to $0 in case of default. Most likely there will be speculation on Tether's illiquid assets value that could be sold back to pay creditors.
      - Nursie 4y ago
        > The most likely scenario is that Tether is _overall_ solvent, though not in liquid assets. What makes you believe this?
        eaurouge 4y ago
        By the numbers: - 66B in liabilities - 17B in redemptions over a 2 month period (proof of some liquidity) - 8 years of operation - 100s of millions in annual revenue How many billions are they short? What redemption rate would it take? Which catalyst? At this point, the question should be: what makes you believe they are insolvent? Edit: assets -> liabilities
        Nursie 4y ago
        > 66B in assets We don't really know this, and a lot of their assets seem to be things like "corporate paper", which may simply be IOUs from exchanges they've given Tethers to. > At this point, the question should be: what makes you believe they are insolvent? A history of lies about audits, for a start. Admissions that they weren't fully backed in court at various points in the past (73% was bandied around by their own people at some point). Plus if the 'corporate paper' situation is anything like described, in any sort of crunch situation it could prove to be worthless.
  - albntomat0 4y ago
    If a run on a theoretically partially backed Tether, the initial folks trying to redeem would get fully paid out from the reserves. This would be done in an effort to make Tether seem stable, with the hope that people regain confidence, and not everyone tries to redeem. This continues until the reserves are depleted.
  - HWR_14 4y ago
    Tether could be worth $0.50 if the company said "We lost half the money and need to reset the peg". They would have to then redeem all the outstanding Tether, as no one will trust them. Therefore, this is unlikely to happen, as it will end the company.
  - deleted 4y ago
    [deleted]
- jboy55 4y ago
  Given its either worth what you paid for it and there is a non-zero risk its work zero, there is absolutely no reason you should ever own it for more time that its absolutely required.
imachine1980_ 4y ago
>prohibited from permitting Canadian clients to trade, or obtain exposure to, any crypto asset that is itself a security and/or a derivative Both are derivative do Both will be block probably

by ivalm 4y ago

I think it just pushes these markets to switch to usdc, which is a good thing as (1) making crypto more tied to audited assets (2) make redemption subject to AML.

hestefisk 4y ago

Agree. People bought tether to have a stable store of value so it will only push funds into USDC or similar.

vkou 4y ago

Assuming that Tether is a fraud...: The problem is that Tether is either worth $1 (Current status quo), or $0 (When everyone loses faith in it.) It will transition from one to the other at... Some point. And there will, by definition, be a lot of bagholders who have not managed to redeem it in time. The rest of the ecosystem will not have a soft landing from that. Oh, sure, anyone who bought USDC will be fine, but all the non-pegged coins will be in for a very, very rough ride.

loopdoend 4y ago
How is $0 even possible? It seems to me it must be at least partially backed.
- deleted 4y ago
  [deleted]
- diab0lic 4y ago
  Everyone withdrawing when they have money gets $1, everyone trying to withdraw after insolvency hits gets $0. If this were to occur the secondary market would bear some small but nonzero value representing the off chance that it is a liquidity issue and not a solvency issue.
- dragontamer 4y ago
  Let's say there is 60 Billion total Tether, but only $30 Billion backing it. As soon as people realize the issue, they will trade USDT for USD. Tether will defend the peg, spending $30 Billion to hold it's value at 1 USDT for $1. Thirty Billion later, the overall situation is 30 Billion USDT remaining, but the bank vaults are empty nothing left over to defend the peg. At this point, USDT snaps to $0 very quickly.
- ericd 4y ago
  I imagine that if it's partially backed, and everyone tries to redeem, and they try to defend the peg in order to not admit that it's insolvent, then they'll redeem at $1 until they can't, at which point it will be worth ~$0.
  - Galanwe 4y ago
    Just trying to be picky: The most likely scenario is that Tether is _overall_ solvent, though not in liquid assets. What would likely happen in case of a bank run is: 1) Tether will defend the peg and redeem at $1 2) Tether will freeze redeems because of limited liquidity 3) Tether will fill face huge pressure and regulatory threats 4) Some people will want to exit USDT immediately at a discounted price (say $0.5), while some others will buy discounted USDT hoping once Tether solves its liquidity issues or bankrupt they could get more than $0.5 per USDT. TLDR: USDT will most likely not go to $0 in case of default. Most likely there will be speculation on Tether's illiquid assets value that could be sold back to pay creditors.
    - Nursie 4y ago
      > The most likely scenario is that Tether is _overall_ solvent, though not in liquid assets. What makes you believe this?
      - eaurouge 4y ago
        By the numbers: - 66B in liabilities - 17B in redemptions over a 2 month period (proof of some liquidity) - 8 years of operation - 100s of millions in annual revenue How many billions are they short? What redemption rate would it take? Which catalyst? At this point, the question should be: what makes you believe they are insolvent? Edit: assets -> liabilities
        Nursie 4y ago
        > 66B in assets We don't really know this, and a lot of their assets seem to be things like "corporate paper", which may simply be IOUs from exchanges they've given Tethers to. > At this point, the question should be: what makes you believe they are insolvent? A history of lies about audits, for a start. Admissions that they weren't fully backed in court at various points in the past (73% was bandied around by their own people at some point). Plus if the 'corporate paper' situation is anything like described, in any sort of crunch situation it could prove to be worthless.
- albntomat0 4y ago
  If a run on a theoretically partially backed Tether, the initial folks trying to redeem would get fully paid out from the reserves. This would be done in an effort to make Tether seem stable, with the hope that people regain confidence, and not everyone tries to redeem. This continues until the reserves are depleted.
- HWR_14 4y ago
  Tether could be worth $0.50 if the company said "We lost half the money and need to reset the peg". They would have to then redeem all the outstanding Tether, as no one will trust them. Therefore, this is unlikely to happen, as it will end the company.
- deleted 4y ago
  [deleted]
jboy55 4y ago
Given its either worth what you paid for it and there is a non-zero risk its work zero, there is absolutely no reason you should ever own it for more time that its absolutely required.

imachine1980_ 4y ago

>prohibited from permitting Canadian clients to trade, or obtain exposure to, any crypto asset that is itself a security and/or a derivative Both are derivative do Both will be block probably