because some guy on twitter said any Tether exposure to commercial paper = 150% exposure to imploding evergrande bonds

this is the funniest meme, “we made it up” https://youtu.be/GM-e46xdcUo

Its a pretty clever meme because pointing out how dumb it is makes it seem like that person doesnt believe there is anything else wrong with tether, immediate derailing their criticism of the latest rumor, allowing for literally any rumor to be masqueraded as truth.

I don't think Tether is in purely Evergrande bonds, but I do think Tether has a load of Chinese bonds/commercial paper, and if an Evergrande default causes a general reduction in the value of those, Tether will be in a very sticky position as they'll have a large hole in their reserves...

Why would anyone care? It's not like Tether has ever been audited and there is so much other shadiness that it's more than likely there is already a massive hole in the Tether reserves.

Why do you believe that?

So AFAIK Tether has ~$30b of commercial paper (https://tether.to/wp-content/uploads/2021/08/tether_assuranc...) which would make it one of the larger commercial paper operators in the US market if it operated there.

From what I've read, other paricipants in the US market have stated they don't see Tether partipating there, to that kind of volume.

Combine that with the fact that, until recently, China was a huge market for crypto both miners and traders, and it seems likely that the large chinese commercial paper market would be where Tether would have at least some of it's money.

I don't understand why anyone believes Tether when they say they own $30b of commercial paper. The fact that nobody in any of the commercial paper markets know who they are suggests that Tether is once again at least being misleading if not lying.

They have to own something for $30B+ [1]. It is unlikely it is anything in significant in the U.S, both because it is harder not to be noticed as you say and also greater risk of interference from regulators etc.

It is not unreasonable to think China has good chunk of those deposits, and in China real estate is a big component of the economy and growth in the recent years.

Chinese real estate market is both large enough and opaque to be able to ingest that kind of capital.

[1] It is possible they are issuing tokens out of thin air without actually taking in equivalent USD/fiat currency, but given it trading volume on crypto exchanges it seems unlikely say 90+% of their $73B + are tokens fake. Even 10% is $7.3B a very significant sum.

They're probably exchanging Tether for loans that their counterparties write against crypto collateral and calling that "commercial paper".

Anything else is ridiculous because people would notice it. If it is all self-contained withing crypto then it makes vastly more sense.

Once you think of a cold wallet full of bitcoin as having value like real estate[*] then it makes sense to take out tether loans against that collateral.

They need to make up something though to sound responsible so they call it "commercial paper" and for some reason nobody questions if they might be grossly twisting the meaning of those two words.

[*] Which I don't, but everyone involved in crypto certainly does.

Honestly, if anybody ever bothered to assume that Tether worked the way it was advertised most of the time - just like both the NYAG and CFTC found most of the time for most Tethers - it would actually all make sense.

Why would better managed and more transparent competitors like USDC, GUSD, and PAXOS all be rising in circulation at the exact same trajectory as Tether, if Tether was just doing funny money accounting or having completely uncollateralized Tethers compared to just the same distribution of regional crypto enthusiasm in the same kinds of transactions. What if, yeah I know, what if people actually just deposit fiat and rarely redeem for fiat because they treat stablecoins as basically their savings and investing account. The craaaziest idea, I know, but the behavior is being mimicked across all fiat-backed stablecoins which suggests that its harder to assume the worst about Tether simply because its never transparent enough and yeah, it won't be. My only point is to think "hm maybe people actually use it and like it and that's the vast majority of the creation of more tethers just like two US regulators found."

Because nobody is going to be dumping $70B of actual USD into Tether while BTC is running up massively in value.

That would effectively be $70B parked under a mattress.

Tethers are only destroyed when they are redeemed. When people create Tether and trade them, they still exist with whoever is the recipient.

The same with other bank account stablecoins.

Much of that Tether is stored within liquidity pools and other onchain financial services, the same with other bank account stablecoins. So thats not a great assumption to bolster the ongoing transparency issues with Tether.

If their commercial paper is something other than Evergrande, surely they'd have said so by now. (Assuming it exists at all, of course)

They dont need to respond to every rumor, its been a whole decade, they’ve weathered much greater crisis of confidence with far below $1 exchange rates. The people that do care would have said prove it, aka “disprove the random rumor”, and wouldn't be satisfied with any statement or attestation or anything greater that they’ve never done anyway. At this point whats the use of energy in that direction anymore. Even audited stablecoins are a systemic risk to the crypto ecosystem. So at this point your either in or out. Hot potato. Just like all the other markets where Lehman bros and Aig got such great audits and ratings. I’m not trying to squash conversation about it, just offering a perspective because really the standard being levied applies to USDC, GUSD, PAXOS and others who have grown to similarly large heights.

Even the earlier assumption that Tether wouldnt have US assets is made up on the spot, its weird! They were banking in Peurto Rico for years! Two US regulators didnt move to freeze their assets they just said “update your disclaimers”. Why dont we make a rumor that they hold Hertz bonds and Certificates of Deposit at Capital One Bank? Its arbitrary! They should prove they dont have Hertz bonds just so I can say “I …. dont believe you.”

They have said it's not Evergrande.