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Hmm. 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

by pjc50 1y ago

Hmm. 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 ago
People 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 ago
  Can people holding tether for a day or two while entering of exiting crypto really explain these large amounts?
  - yieldcrv 1y ago
    yes
  - rattlesnakedave 1y ago
    There 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 ago
    Why for a day or two?
    - hyghjiyhu 1y ago
      I thought he meant basically buy tether with dollar transfer exchange for btc. That shouldn't take long.
  - sunshine-o 1y ago
    I 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.
    - hyghjiyhu 1y ago
      You get 5%? If so, that is surely a big piece of the puzzle. Where do those % come from? Bonds don't yield that right?
      - sunshine-o 1y ago
        There are many ways, the most common is to lend your stablecoins against collateral crypto. So if you put 1000 USD in the lending pool you have let's say the guarantee 2500 USD worth of bitcoin are serving as collateral. That will get you about 5% on a serious protocol. You can also provide liquidity on a stable stablecoin/stablecoin pair on a reputable decentralized exchange and get some of the fees. There are surely many other "safe" ways. If you live in Switzerland you're probably not gonna bother but it is more transparent and safer than than what a lot of people have access to around the world. I know the DAI stablecoin was already very popular as a saving account in Argentina around 2018-2019.
  - yieldcrv 1y ago
    people don't exit its just like your brokerage account, imagine if Schwab issued a stablecoin for every deposit someone made and only delete some of that stablecoin when they redeem you'll find that people deposit and trade, they keep their balances there their entire life and beyond. when they trade, they are selling the stablecoin to someone else, someone else could redeem but they aren't either. stablecoins are liquid and useful, they have passive income capabilities while holding your principle value so for Schwab's reporting, the balances always increase as people deposit more whenever they get their paycheck this is what you're seeing with Tether, and all other leading stablecoins, as they grow at the same pace as they capture the same market when actual traditional finance brokerage firms start issuing stablecoins, you'll see the same thing, the stablecoin just offers transparent real time behavior into their customer deposits the only time stablecoin balances go down, and subsequently treasuries are offloaded behind the scenes, is when someone redeems a stablecoin for fiat currency. this isn't necessary, people don't want fiat or don't need to get fiat by redeeming it
  - delabay 1y ago
    I don't think it has dawned on the HN crowd how insatiable the demand for dollars across the world is. This stuff is being used in all corners of the world, and accelerating.
m00dy 1y ago
Cantor Fitzgerald
- cypherpunks01 1y ago
  Correct, this is the answer. Wasn't really known until this year. https://fortune.com/crypto/2024/11/25/commerce-nominee-howard-lutnick-tether-booster-cantor-fitzgerald/ https://fortune.com/crypto/2024/11/25/commerce-nominee-howar...
  - evdubs 1y ago
    It was known in early 2023. https://www.wsj.com/finance/currencies/wall-street-firm-oversees-billions-of-dollars-backing-tether-b56c68c1 https://www.wsj.com/finance/currencies/wall-street-firm-over...
jameskilton 1y ago
As Matt Levine has said multiple times in "Money Stuff", Tether has found the perfect business plan. They hold billions of actual USD, and get to keep all of the interest for themselves.
- glitchc 1y ago
  Cash doesn't earn interest. T-bills and money market funds earn minimal interest compared to equities. Given the size of their holdings, Tether is paying a huge opportunity cost for their position. I don't consider that good business.
  - samtheprogram 1y ago
    They aren't just holding cash and/or doing nothing with it. Come on.
    - btilly 1y ago
      If you believe their attestations, they pretty much are. See, for example, https://assets.ctfassets.net/vyse88cgwfbl/2SGAAXnsb1wKByIzkhcbSx/9efa4682b3cd4c62d87a4c88ee729693/ISAE_3000R_-_Opinion_Tether_International_Financial_Figure_RC187322025BD0201.pdf https://assets.ctfassets.net/vyse88cgwfbl/2SGAAXnsb1wKByIzkh.... Most of the money is in Treasuries, or markets like overnight repos that behave much like Treasuries. Most of the rest is in things like corporate bonds, which again generally move like cash. Only their claimed excess equity is in riskier investments, like Bitcoin. If you doubt their attestation, it is more reasonable to doubt their claimed total assets before worrying about the breakdown of their investments.
  - beeflet 1y ago
    that may be true but minimal interest is greater than no interest.
  - crote 1y ago
    People are giving them money for free. They pay absolutely zero interest or dividend to "investors". For the crypto people, Tether's job is to accept money and do nothing with it. US debt is about as stable as the dollar itself, so to their crypto customers buying bonds is a no-op. Any yield is pure profit for Tether itself.
voidmain0001 1y ago
NPR Planet Money has a podcast from last week speaking about hedge funds buying US treasuries. They touch on the chaos that can come from hedge funds buying treasuries and suggest that hedge funds might be lumped into the too big to fail group. https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasury-market-auctions-goldman-sachs-basis-trade https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasu...
actionfromafar 1y ago
Do they hold it? How would we know?
- evdubs 1y ago
  Attestation reports. Every quarter, BDO confirms holdings directly with Tether's banking partners. https://tether.to/en/transparency/?tab=reports https://tether.to/en/transparency/?tab=reports
tim333 1y ago
I hold some Tether. It's fairly normal if you speculate on crypto.
alecco 1y ago
It's incredible how this comment got a bunch of replies not understanding the question. Explanation: Tether is not holding a stack of paper bonds in a safe. They must use some broker (or similar) to operate and hold the treasuries for them. And they are hiding how this is working. So the parent's question is who do they (Tether) hold it (treasuries) through (as in what broker/investment bank/whatever). My answer is nobody outside Tether knows. And they are one of the dodgiest companies out there. We are totally audited, bro, trust me. They could be doing leveraged investments. Or they could just be Madoff 2.0. Nobody really knows. And the US government seems to be looking the other way because they are desperate for any buyers of treasuries.
- pjc50 1y ago
  Exactly. I got this pointed out by one of the old school finance guys I've followed for years on Twitter/bsky; if you're a market participant of that size, other participants should expect to know who you are. If only because someone buying a billion dollars of bonds a week is useful to know if you want to unload some bonds. USDC by contrast are open in their holdings, through Blackrock. Large invisible "dark matter" financial holdings are the sort of thing that blow up badly during a financial crisis.
  - evdubs 1y ago
    Tether banks with Cantor Fitzgerald. Everyone trading large amounts of US Treasury bills knows who Cantor Fitzgerald is.
- evdubs 1y ago
  You're not paying attention, or you are wilfully ignoring the evidence. Tether banks with Cantor Fitzgerald, a primary dealer with the Federal Reserve. From 2023: https://www.wsj.com/finance/currencies/wall-street-firm-oversees-billions-of-dollars-backing-tether-b56c68c1 https://www.wsj.com/finance/currencies/wall-street-firm-over... Every quarter, BDO confirms Tether's assets by going to Tether's banking partners directly. https://tether.to/en/transparency/?tab=reports https://tether.to/en/transparency/?tab=reports

by pjc50 1y ago

airza 1y ago

People 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 ago
Can people holding tether for a day or two while entering of exiting crypto really explain these large amounts?
- yieldcrv 1y ago
  yes
- rattlesnakedave 1y ago
  There 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 ago
  Why for a day or two?
  - hyghjiyhu 1y ago
    I thought he meant basically buy tether with dollar transfer exchange for btc. That shouldn't take long.
- sunshine-o 1y ago
  I 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.
  - hyghjiyhu 1y ago
    You get 5%? If so, that is surely a big piece of the puzzle. Where do those % come from? Bonds don't yield that right?
    - sunshine-o 1y ago
      There are many ways, the most common is to lend your stablecoins against collateral crypto. So if you put 1000 USD in the lending pool you have let's say the guarantee 2500 USD worth of bitcoin are serving as collateral. That will get you about 5% on a serious protocol. You can also provide liquidity on a stable stablecoin/stablecoin pair on a reputable decentralized exchange and get some of the fees. There are surely many other "safe" ways. If you live in Switzerland you're probably not gonna bother but it is more transparent and safer than than what a lot of people have access to around the world. I know the DAI stablecoin was already very popular as a saving account in Argentina around 2018-2019.
- yieldcrv 1y ago
  people don't exit its just like your brokerage account, imagine if Schwab issued a stablecoin for every deposit someone made and only delete some of that stablecoin when they redeem you'll find that people deposit and trade, they keep their balances there their entire life and beyond. when they trade, they are selling the stablecoin to someone else, someone else could redeem but they aren't either. stablecoins are liquid and useful, they have passive income capabilities while holding your principle value so for Schwab's reporting, the balances always increase as people deposit more whenever they get their paycheck this is what you're seeing with Tether, and all other leading stablecoins, as they grow at the same pace as they capture the same market when actual traditional finance brokerage firms start issuing stablecoins, you'll see the same thing, the stablecoin just offers transparent real time behavior into their customer deposits the only time stablecoin balances go down, and subsequently treasuries are offloaded behind the scenes, is when someone redeems a stablecoin for fiat currency. this isn't necessary, people don't want fiat or don't need to get fiat by redeeming it
- delabay 1y ago
  I don't think it has dawned on the HN crowd how insatiable the demand for dollars across the world is. This stuff is being used in all corners of the world, and accelerating.

m00dy 1y ago

Cantor Fitzgerald

cypherpunks01 1y ago
Correct, this is the answer. Wasn't really known until this year. https://fortune.com/crypto/2024/11/25/commerce-nominee-howard-lutnick-tether-booster-cantor-fitzgerald/ https://fortune.com/crypto/2024/11/25/commerce-nominee-howar...
- evdubs 1y ago
  It was known in early 2023. https://www.wsj.com/finance/currencies/wall-street-firm-oversees-billions-of-dollars-backing-tether-b56c68c1 https://www.wsj.com/finance/currencies/wall-street-firm-over...

jameskilton 1y ago

As Matt Levine has said multiple times in "Money Stuff", Tether has found the perfect business plan. They hold billions of actual USD, and get to keep all of the interest for themselves.

glitchc 1y ago
Cash doesn't earn interest. T-bills and money market funds earn minimal interest compared to equities. Given the size of their holdings, Tether is paying a huge opportunity cost for their position. I don't consider that good business.
- samtheprogram 1y ago
  They aren't just holding cash and/or doing nothing with it. Come on.
  - btilly 1y ago
    If you believe their attestations, they pretty much are. See, for example, https://assets.ctfassets.net/vyse88cgwfbl/2SGAAXnsb1wKByIzkhcbSx/9efa4682b3cd4c62d87a4c88ee729693/ISAE_3000R_-_Opinion_Tether_International_Financial_Figure_RC187322025BD0201.pdf https://assets.ctfassets.net/vyse88cgwfbl/2SGAAXnsb1wKByIzkh.... Most of the money is in Treasuries, or markets like overnight repos that behave much like Treasuries. Most of the rest is in things like corporate bonds, which again generally move like cash. Only their claimed excess equity is in riskier investments, like Bitcoin. If you doubt their attestation, it is more reasonable to doubt their claimed total assets before worrying about the breakdown of their investments.
- beeflet 1y ago
  that may be true but minimal interest is greater than no interest.
- crote 1y ago
  People are giving them money for free. They pay absolutely zero interest or dividend to "investors". For the crypto people, Tether's job is to accept money and do nothing with it. US debt is about as stable as the dollar itself, so to their crypto customers buying bonds is a no-op. Any yield is pure profit for Tether itself.

voidmain0001 1y ago

NPR Planet Money has a podcast from last week speaking about hedge funds buying US treasuries. They touch on the chaos that can come from hedge funds buying treasuries and suggest that hedge funds might be lumped into the too big to fail group. https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasury-market-auctions-goldman-sachs-basis-trade https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasu...

actionfromafar 1y ago

Do they hold it? How would we know?

evdubs 1y ago
Attestation reports. Every quarter, BDO confirms holdings directly with Tether's banking partners. https://tether.to/en/transparency/?tab=reports https://tether.to/en/transparency/?tab=reports

tim333 1y ago

I hold some Tether. It's fairly normal if you speculate on crypto.

alecco 1y ago

It's incredible how this comment got a bunch of replies not understanding the question. Explanation: Tether is not holding a stack of paper bonds in a safe. They must use some broker (or similar) to operate and hold the treasuries for them. And they are hiding how this is working. So the parent's question is who do they (Tether) hold it (treasuries) through (as in what broker/investment bank/whatever). My answer is nobody outside Tether knows. And they are one of the dodgiest companies out there. We are totally audited, bro, trust me. They could be doing leveraged investments. Or they could just be Madoff 2.0. Nobody really knows. And the US government seems to be looking the other way because they are desperate for any buyers of treasuries.

pjc50 1y ago
Exactly. I got this pointed out by one of the old school finance guys I've followed for years on Twitter/bsky; if you're a market participant of that size, other participants should expect to know who you are. If only because someone buying a billion dollars of bonds a week is useful to know if you want to unload some bonds. USDC by contrast are open in their holdings, through Blackrock. Large invisible "dark matter" financial holdings are the sort of thing that blow up badly during a financial crisis.
- evdubs 1y ago
  Tether banks with Cantor Fitzgerald. Everyone trading large amounts of US Treasury bills knows who Cantor Fitzgerald is.
evdubs 1y ago
You're not paying attention, or you are wilfully ignoring the evidence. Tether banks with Cantor Fitzgerald, a primary dealer with the Federal Reserve. From 2023: https://www.wsj.com/finance/currencies/wall-street-firm-oversees-billions-of-dollars-backing-tether-b56c68c1 https://www.wsj.com/finance/currencies/wall-street-firm-over... Every quarter, BDO confirms Tether's assets by going to Tether's banking partners directly. https://tether.to/en/transparency/?tab=reports https://tether.to/en/transparency/?tab=reports