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Tether is now the 17th largest holder of US debt
- toomuchtodo 1y agohttps://archive.today/eEJMW https://archive.today/eEJMW
- nikhizzle 1y agoArmchair economist here - one implication of this is that a crypto liquidation will cause global interest rates to spike at a time when they will need to be lower to calm the markets. Selling massive amounts of debt with no additional demand means the required return must be higher.
- heisgone 1y agodeleted
- onlyrealcuzzo 1y agoThe US Treasury market is BY FAR the deepest most liquid market in the world.
- kylebenzle 1y agoThe US housing market is the largest market in the world.
- wslh 1y agoGood point but it seems like Tether is very healthy, it has the double of daily volume than Bitcoin now and doesn't really depend on crypto rails [1]. [1] Stable Coins ⊄ Blockchains: https://www.linkedin.com/pulse/stable-coins-blockchains-sebastian-raul-wain-zep3f/ https://www.linkedin.com/pulse/stable-coins-blockchains-seba...
- delabay 1y agoStablecoins are now a regulated industry with laws in place to address this very concern. Tether is currently not compliant, but as the largest player in the space, has a great incentive to maintain its dominance.
- SideburnsOfDoom 1y agoThe USA is going to have a fantastic fiscal reputation if/when that has happened.
- tim333 1y agoI'm not sure I see that, depending what you mean by crypto liquidation. If you mean the prices of dogecoin etc. falling then that mostly just effects the number of Tethers changing hands between one speculator and another and wouldn't really affect the bond market. If you mean Tether holders redeeming them for US dollars, that would involve selling treasuries but I doubt it would drive the price down that much. That's a very liquid market.
- nikhizzle 1y agoI mean tether redemptions. Hedge funds liquidating treasuries last year significantly distorted yields for a short while.
- yieldcrv 1y agothat's very armchair indeed a crypto liquidation results in more people going to Tether. "tethered" and "tethering" has been a verb in the crypto space for like 10 years when market demand of tether is too great the value goes about $1.00 and the organization relies on arbitragers to deposit more to cause the minting of Tethers at $1.00 and selling it into the open market if the price is above $1.00 pushing the market rate back down to $1.00 Tethers in existence still continue to grow in that scenario Its nearly 1:1 backing, most of the time, even a mass redemption event of Tethers will be orderly and fine. those crisis of confidence have alreay occurred, those stress tests have already happened, far faaaar beyond what any bank would survive all fiat collateralized stablecoins function the same way and there are many case studies, actual events that happened, that show it occurring orderly, uneventfully.
- sunshine-o 1y ago> when market demand of tether is too great the value goes about $1.00 and the organization relies on arbitragers to deposit more to cause the minting of Tethers at $1.00 and selling it into the open market if the price is above $1.00 pushing the market rate back down to $1.00 I'm not sure of this. USDT can only be minted by tether [0] (line 406), hopefully when they acquire more treasuries. I am not exactly sure where the price of USDT come from and I am pretty sure there is not only one. But I would guess it is an aggregate of the prices on exchanges. The chainlink oracle [1] is probably the most authoritative one. - [0] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7#code https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c... - [1] https://data.chain.link/feeds/ethereum/mainnet/usdt-usd https://data.chain.link/feeds/ethereum/mainnet/usdt-usd
- yieldcrv 1y agoNobody is “setting the price”, people trade. supply and demand. on many venues and contracts. the oracles just read from those (and sometimes the venues and contracts read from the oracles) when tethers and trading at $1.04 or anything higher than $1.00 arbitrageurs wire money to their account at the Tether organization (bitfinex, otc services) to instruct the organization to mint Tether the organization does everything necessary: takes the deposited money and buys US treasuries, mints the equivalent amount of Tethers and gives those tethers to the customer The customer deposited $1 and received 1 tether. Some exchange venues have people rushing to buy 1 Tether for $1.04 Customer sells their tether to them and has some other form of crypto that they can try to get back into dollars and do it all over again, until flooding the market with Tether supply back to $1.00 this happens all day every day for a decade, more pronounced during panic selling periods
- pjc50 1y agoHmm. Who do they hold it through? USDC are using Blackrock as an intermediary, but Tether have always been very opaque about their actual structure. And who are all these people who have swapped cash for a non-cash token which does NOT bear interest, unlike the bonds?
- airza 1y agoPeople give tether their USD so they can bypass currency controls when buying and selling crypto online. There are a lot of them to put it mildly.
- hyghjiyhu 1y agoCan people holding tether for a day or two while entering of exiting crypto really explain these large amounts?
- yieldcrv 1y agoyes
- rattlesnakedave 1y agoThere are plenty of people in jurisdictions where it is difficult to get dollars that use them for other things. Normal transactions, gambling, saving in USD. Not uncommon.
- gomox 1y agoWhy for a day or two?
- hyghjiyhu 1y agoI thought he meant basically buy tether with dollar transfer exchange for btc. That shouldn't take long.
- sunshine-o 1y agoI think the the market for those stablecoins is now broader than criminal and traders. There is a huge demand for dollars by individuals outside of the US. Countries where people do not really trust their banks and currencies. Even in the Euro zone, most saving accounts will give you about 1% after taxes. So why not going with USDT, USDC or EURC and get about 5% on a relatively safe lending platform.
- wartywhoa23 1y agoThis bubble will inevitably burst louder than Krakatoa.
- dboreham 1y agoCurious: why? Aren't bubbles about people buying some instrument (stock, bond, bitcoin...) with borrowed real money that is not eventually worth as much as they think it is? People buying stablecoins are exchanging presumably not-borrowed real money for something that amounts to a zero-interest money market fund. Presumably not borrowed because the stablecoin explicitly pays no yield.
- deleted 1y ago[deleted]
- throwaway-0001 1y agoSomeone just deleted a comment so I’ll put it again here “ Tether is backed by nothing, so it can presumably print without end. If it's suspected they've done this, it could lose its peg. If that happens, it could have consequences.” There is no reason not to do an audit except when it’s a scam/all money gone. No accounting company wants to do their audit - guess why.
- wslh 1y ago> Tether is backed by nothing... If you look at their yearly profits and liquid cash, clearly Tether is backed by something. This is not the same as saying that they have full transparency but you cannot have those profits in dollars out of thin air.
- throwaway-0001 1y ago“Since at least 2017 … Tether has been assuring investors that it will get audited, though it has yet to deliver“ can you give me a single reasonable reason this was not done in 8 years? Usually the correct answer is the simplest - fraud.
- karel-3d 1y agoToo big to fail...?
- IT4MD 1y ago[dead]
- kingstnap 1y agoHave people basically loaned these guys a free $135B to let them buy bonds with?
- throwaway-0001 1y agoIf they bought bonds would be amazing. 99% chances there is not much left. We’ve been saying this for years so not sure when will crash. But definitively it’s a scam
- delabay 1y agoTotally, utterly, completely false. An honest discussion of this matter has no space for tether truthers stuck in the year 2015.
- disgruntledphd2 1y agoCan you provide their audits then please? Otherwise I'm not sure how you can be so certain.
- delabay 1y agoIf tether wants to maintain their dominant position (they do) then they will work to be compliant with the LAW, on a timeline deemed appropriate by the law makers. Take your conspiratorial trutherism elsewhere.
- actionfromafar 1y agoThe LAW is spelled "keep in good standing with the President". He might feel his little coin grifts are left behind. On a timeline deemed appropriate by the law makers is making a lot of heavy lifting here. The (GOP) lawmakers won't lift a finger to do anything unless the Leader says so.
- SpicyLemonZest 1y agoYou're right that Tether claims they could not previously get an audit and need the government to smooth the way (https://www.reuters.com/technology/tether-is-talks-with-big-four-firm-about-reserve-audit-ceo-says-2025-03-21/ https://www.reuters.com/technology/tether-is-talks-with-big-...), but why would that be the case? Companies get audited all the time. Tether seems to have their own "conspiratorial trutherism" in mind, where the Biden administration secretly told all the major audit firms that they mustn't allow Tether to be audited because that might make crypto look good. And even that doesn't explain why they couldn't get an audit from 2017 to 2020. To me the obvious explanation is that they would not pass an honest audit, and hope having the CEO of their primary brokerage in the Cabinet will help them cheat.
- delabay 1y agoThis number will continue to climb and I am confident before the decade ends, stablecoins broadly will be the largest holder of US debt. The interests are fully aligned between the issuers and US govt - issuers keep the interest, US has a price insensitive buyer of debt. This is ultimately good for the world, good for democracy, and good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey, who have suffered their own currency crises to the great detriment of their citizens. With only an Internet connection, US dollar stablecoins give them property rights which can't be voided through an act of the corrupt ruling class. Before the tether truthers come out, update your priors. This industry is very different than it was in 2015. It has grown up substantially. The GENIUS act is the largest banking and financial reform of the last 100 years, and the consequences will shape the 21st century and local currencies globally.
- MangoToupe 1y ago> good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey, who have suffered their own currency crises to the great detriment of their citizens. Well, except that it ties them to USD, an ultimately doomed currency. The short-term interests are aligned, but they'd be better off with a locally-managed currency and simply banning the USD from being held by either the state or any of its representatives.
- delabay 1y ago"Better off with a locally managed currency" wow, please research the counties I mentioned for five minutes. It's a luxury opinion to view the USD as trash. It means you have options. USD is the best many people in the world can hope for.
- daveguy 1y agoExcept any country can make up their own crypto "stable" coins.
- MangoToupe 1y ago
- buyucu 1y agoThe bigger news here is that China is rapidly winding down its holdings of US debt. This is very bad for America. We'll see American standards of living decline without the Chinese financing American extravagance.
- pixl97 1y agoWhich will cause great unrest in the US and further allow authoritarian takeover. Fun times.
- delabay 1y agoStablecoins offer a relentless price insensitive buyer of US debt. This is good for America, good for democracy, and good for property rights globally. However, stablecoins WILL cause unrest in Nigeria, Venezuela, Lebanon, and Turkey as their corrupt local currency completely erodes and the ruling class can no longer extract from their citizens.
- vlovich123 1y agoThat sounds like a perpetual motion machine that the US can get addicted to and then come apart once stable coins suddenly become price sensitive.
- delabay 1y agoOr, an alternative, and hear me out, maybe this could also be called "an economy"
- daveguy 1y agoConfidence in crypto will go poof when there's a big enough run that the measly 7 transactions per second can't keep up with demand. We just haven't seen a crypto bank run yet. The $100 / transaction is nothing compared to what it could be. When that happens "stable" coins will lose their stability and the smoke and mirrors behind audit-free coins will collapse. You couldn't pay me to hold crypto.
- tock 1y agoStablecoins are the greatest business model ever. You hold money as treasuries and earn risk free interest. There is literally no tech spend either. All profit no expenses.
- btilly 1y agoPresumably the figures for Tether's holdings are based on their attestations. Should we believe those figures to be real? There is no other source for estimates of their financial holdings than those attestations. For years, Tether has promised that they are working on an audit. No audit has emerged. This is suspicious because audits aren't particularly hard for legitimate organizations. People have gone looking for evidence that Tether really has as much as it has said. Nobody has succeeded. For example https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether https://www.bloomberg.com/news/features/2021-10-07/crypto-my.... Which, after noting Tether's settlement for past fraud, and prominent executives with suspicious criminal histories, famously said that Tether "is quilted out of red flags." And yet, many strongly believe that Tether is for real. Given that nobody has produced evidence of their wealth, I regard this belief as a question of psychology. Said psychological belief has a simple explanation. We humans have a strong tendency towards cognitive dissonance. Meaning that we reject evidence which questions our sense of identity. If I'm a bitcoin millionaire, my likely identity includes, "I'm a millionaire." But the financial system does not allow us to directly trade bitcoin. What I can actually trade bitcoin for is Tether. And therefore my belief in my own wealth relies on trusting that Tether is equivalent to money. How can I support that trust? I can point to someone smart and say, "They believe in Tether, so it must be real!" I can point to someone rich and say, "They believe in Tether, so it must be real!" I can get angry at anyone who doubts Tether. It is easy to observe all three behaviors from people into Crypto. That Bloomberg article offers an ironic example. Back in 2021, many crypto enthusiasts pointed at Sam Bankman-Fried. Who was both rich and smart, and publicly believed in Tether. Therefore he was quoted on the topic. Today, of course, he is in federal prison for having run a Ponzi scheme. If we behaved logically, any crypto enthusiast who used to look up to him, should be saying, "Wait, am I sure I'm placing my trust in the right place?" But, predictably, few do that. Instead they dismiss this past mistake, and place their trust today in someone else. Now everyone knows that crypto is full of Ponzi schemes on top of Ponzi schemes. People are often OK with trying to take advantage of the greater fool, because they don't believe that they will be the greater fool. Others see people apparently making money and get in, driven by FOMO. But statistically, most people in a Ponzi scheme will lose money. And yet they will look like really smart people - right until the scheme collapses. So here is the real question. Does Tether really have the money? Or does the entire infrastructure of crypto Ponzi schemes rest on yet another Ponzi scheme?
- pashabitz 1y ago17th if comparing to sovereign states. There is way more debt held by private domestic investors as well as government agencies.
- exasperaited 1y agoIf I was on the board of Tether or Capital Union I'd be a little scared by this. Trump squeezed Intel for 10%, bullied Tiktok into a sale, and is ordering extrajudicial killings not that far away from the Bahamas. What is to stop him saying: Tether is sketchily governed (seems true), is secretive and unaudited (seems true?), and holds far too much debt for the USA to be secure (could well be true) — "this is against our national security interests"? $135bn that Congress can't touch must be really tempting. What stops him just taking it? Especially since his sense of "national security interests" includes Canada making fun of the USA with clips of Reagan. (I'm not sure that it would even be the wrong thing to do in a more structured, legal way at least)
- somanyphotons 1y agoWhat are the failure modes here? Is the tether company itself a vulnerability?
- d--b 1y agoreminding everyone that using Tether is being exposed to US credit risk without remuneration. This should be illegal as they are screwing people over who don’t know shit about how these things work. mortgages arr regulated, this should be as well.