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Does anyone actually believe that Tether is backed by anything? I know there are at least a few companies that have to pretend Tether is backed by something. Bu

Does anyone actually believe that Tether is backed by anything? I know there are at least a few companies that have to pretend Tether is backed by something. But I can't really believe anyone saying it. It'd be sort of like if someone just declared Madoff never really ran Ponzi scheme. It was just a big misunderstanding. Furthermore does it even really matter if Tether is backed by anything? My understanding is they've always maintained an absolute veto on any redemption. So tehter could be backed by Trillions in assets and it'd be irrelevant.

candiddevmike 1y ago
Tether is the defacto central bank for Bitcoin. Since iFinex isn't a country, doesn't have a GDP, and doesn't have a military, MMT doesn't really apply to them. So yes, it's very important, especially during a significant Bitcoin contraction. Tether represents 8% of Bitcoin's (liquid) market cap, and BTC's market cap is already overly inflated due to wash trading.
monerozcash 1y ago
At this point there's no reason to pretend that Tether isn't likely fully backed, they're printing absurd amounts of money without any need for fraud. This is the most profitable business in the world by many metrics.
- notimetorelax 1y ago
  What’s the mechanism through which they print money? I.e. if everyone decided to redeem all coins that have dollar to give.
  - wmf 1y ago
    They make 4% on treasury bonds (that's ~$4B) and they've also profited on Bitcoin and gold.
- simmerup 1y ago
  So you're saying they buy their own Tether with profits they make elsewhere on the platform?
  - monerozcash 1y ago
    Tether holds closer to 200B USD reserves (customer money) and keeps all interest on that, it's a ridiculously good business. Jeopardizing that in any way would be absurd. Just assuming treasury returns they're making more than 7B USD profit a year with just a couple of employees.
    - simmerup 1y ago
      You're assuming that the 200bn is all customer money. This is very doubtful to me considering that many times Tether magically starts minting billions of new coins to buy Bitcoin whenever Bitcoin prices start falling You're also assuming that they make 7bn in profit per year just by keeping this rdiciulously large amount of money in a bank, but their own notation says that only 105bn is held as US treasury bills. The rest of the money is effectively invested, whether in gold or bitcoin or corporate bonds or loans. All subject to going down aswell as up. Luckily for the cryptocurrency sector, Tether makes it so ridiculously hard to turn Tether into money that their bullshit probably won't be discovered for a long time, so the make believe valuations of bitcoin can stay as they are
    - wat10000 1y ago
      The potential reward for putting it in something riskier is enormous. You and I might consider $7 billion/year to be plenty and there's no point in chasing higher returns, but we tend not to be the sort of person who is in the position to control a fifth of a trillion dollars in the first place. Investing it in something riskier to make more money would be foolish but it's also something that's been done many times before.
delabay 1y ago
A tether truther, in this day and and age? 2017 called... The passing of GENIUS act marks one of, possibly the largest banking regulatory changes in the US. The stablecoin industry is very legitimate, has very firmly established guardrails and rules, and tether is working fast to become fully compliant. This "TeTheR iS a SySTEmiC RiSK tO eVEryThiNG" mentality is fully dead. Tether is compliant in a regulated industry, tether is backed, and tether is quickly running away with the entire market.
- wat10000 1y ago
  How does the GENIUS act apply to Tether, given they're not in the US and their product is not officially available in the US?
  - delabay 1y ago
    Tether will migrate to a US regulated structure
    - wat10000 1y ago
      When that happens then it'll be relevant, but I don't see how it means everything is fine now.
      - delabay 1y ago
        A company actively navigating a huge regulatory change is not the same as a flagrant scam hiding in plain sight. I don't know why I'm bothering to reply. Tether truthers are modern day financial luddites, willingly blind and ignorant of the sea change taking place in plain sight after the passing of GENIUS.
        wat10000 1y ago
        I don't have a dog in this fight. I don't much care about crypto and know pretty much nothing about Tether beyond the fact that they have a USD-linked coin, plus what I just read on Wikipedia. "They're on the up-and-up because they say they're going to be complying with US law in the future" just isn't a very convincing argument.
jawiggins 1y ago
A reasonably common belief among people who have studied the issue is that Tether was at one point unbacked (see NY AG report), and likely fudged their numbers a bit through the use of corperate paper which was plausibly worth $1 but practically could be bought for less than $1, but they have since made enough through various investments that they could now plausibly be fully backed.
- 3abiton 1y ago
  This sounds like black magic, ie waiting for a "bank run" to test the validity of Tether.
  - jawiggins 1y ago
    Yes - a common criticism of tether is that many times they have claimed to have an audit coming "soon".
    - disgruntledphd2 1y ago
      And to be fair, given basically all of the fraudulent companies that managed to pass audits, the fact that they won't even bother is a pretty strong signal. But hey, ultimately it's just gonna blow up the economy at some point, but we'll be fine right? Right?

candiddevmike 1y ago

Tether is the defacto central bank for Bitcoin. Since iFinex isn't a country, doesn't have a GDP, and doesn't have a military, MMT doesn't really apply to them. So yes, it's very important, especially during a significant Bitcoin contraction. Tether represents 8% of Bitcoin's (liquid) market cap, and BTC's market cap is already overly inflated due to wash trading.

monerozcash 1y ago

At this point there's no reason to pretend that Tether isn't likely fully backed, they're printing absurd amounts of money without any need for fraud. This is the most profitable business in the world by many metrics.

notimetorelax 1y ago
What’s the mechanism through which they print money? I.e. if everyone decided to redeem all coins that have dollar to give.
- wmf 1y ago
  They make 4% on treasury bonds (that's ~$4B) and they've also profited on Bitcoin and gold.
simmerup 1y ago
So you're saying they buy their own Tether with profits they make elsewhere on the platform?
- monerozcash 1y ago
  Tether holds closer to 200B USD reserves (customer money) and keeps all interest on that, it's a ridiculously good business. Jeopardizing that in any way would be absurd. Just assuming treasury returns they're making more than 7B USD profit a year with just a couple of employees.
  - simmerup 1y ago
    You're assuming that the 200bn is all customer money. This is very doubtful to me considering that many times Tether magically starts minting billions of new coins to buy Bitcoin whenever Bitcoin prices start falling You're also assuming that they make 7bn in profit per year just by keeping this rdiciulously large amount of money in a bank, but their own notation says that only 105bn is held as US treasury bills. The rest of the money is effectively invested, whether in gold or bitcoin or corporate bonds or loans. All subject to going down aswell as up. Luckily for the cryptocurrency sector, Tether makes it so ridiculously hard to turn Tether into money that their bullshit probably won't be discovered for a long time, so the make believe valuations of bitcoin can stay as they are
  - wat10000 1y ago
    The potential reward for putting it in something riskier is enormous. You and I might consider $7 billion/year to be plenty and there's no point in chasing higher returns, but we tend not to be the sort of person who is in the position to control a fifth of a trillion dollars in the first place. Investing it in something riskier to make more money would be foolish but it's also something that's been done many times before.

delabay 1y ago

A tether truther, in this day and and age? 2017 called... The passing of GENIUS act marks one of, possibly the largest banking regulatory changes in the US. The stablecoin industry is very legitimate, has very firmly established guardrails and rules, and tether is working fast to become fully compliant. This "TeTheR iS a SySTEmiC RiSK tO eVEryThiNG" mentality is fully dead. Tether is compliant in a regulated industry, tether is backed, and tether is quickly running away with the entire market.

wat10000 1y ago
How does the GENIUS act apply to Tether, given they're not in the US and their product is not officially available in the US?
- delabay 1y ago
  Tether will migrate to a US regulated structure
  - wat10000 1y ago
    When that happens then it'll be relevant, but I don't see how it means everything is fine now.
    - delabay 1y ago
      A company actively navigating a huge regulatory change is not the same as a flagrant scam hiding in plain sight. I don't know why I'm bothering to reply. Tether truthers are modern day financial luddites, willingly blind and ignorant of the sea change taking place in plain sight after the passing of GENIUS.
      - wat10000 1y ago
        I don't have a dog in this fight. I don't much care about crypto and know pretty much nothing about Tether beyond the fact that they have a USD-linked coin, plus what I just read on Wikipedia. "They're on the up-and-up because they say they're going to be complying with US law in the future" just isn't a very convincing argument.

jawiggins 1y ago

A reasonably common belief among people who have studied the issue is that Tether was at one point unbacked (see NY AG report), and likely fudged their numbers a bit through the use of corperate paper which was plausibly worth $1 but practically could be bought for less than $1, but they have since made enough through various investments that they could now plausibly be fully backed.

3abiton 1y ago
This sounds like black magic, ie waiting for a "bank run" to test the validity of Tether.
- jawiggins 1y ago
  Yes - a common criticism of tether is that many times they have claimed to have an audit coming "soon".
  - disgruntledphd2 1y ago
    And to be fair, given basically all of the fraudulent companies that managed to pass audits, the fact that they won't even bother is a pretty strong signal. But hey, ultimately it's just gonna blow up the economy at some point, but we'll be fine right? Right?