Tether, the world's largest 'stablecoin', said in a statement it does not hold any commercial paper or securities issued by embattled developer China Evergrande Group, as regulatory scrutiny into risks from this type of token grow. Those questions can only be answered with a little more transparency from the stablecoins issuer. According to a spokesperson from Tether, Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so. The most recent attestation states the average credit rating of its commercial paper holdings is "A-1" - an investment grade based on the ratings scale of Moody's Investor Services, a ratings agency. It is also alleged that Tether also owns commercial paper issued by Evergrande, Chinas second-largest real estate developer, which is itself experiencing a major liquidity crisis. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. madcap@cnbc.com. The Chinese real-estate giant is facing down $300 billion in debt that it cant pay back. Smart navigation app uses 3D sound to guide blind people. He also said that Tether did not hold any commercial paper issued by cryptocurrency exchanges or affiliated entities. CNBC's Jim Cramer urged investors who have gains in their cryptocurrency portfolios to take some profits, saying Monday he believes digital currencies are likely to face more weakness related to struggling Chinese property developer Evergrande. News and analysis for the professional investor. read more. Crypto markets took a dip Thursday just around the time it was reported that Chinas Evergrande Group was on the verge of defaulting on a bond payment. Krypto. Analysis: Goldman Sachs faces hard sell for its consumer assets, Ex-Goldman banker Ng deserves 15 years in prison, US prosecutors say, Reporting by Alun John Given Tethers record to this point, that may take a while. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. As part of that settlement, Tether received a $18.5 million fine, agreed to no longer operate in New York and pledged to provide quarterly reports on its reserves for the next two years. He said that the New York attorney-general had no clear findings that customers at any point were at risk of being unable to redeem tethers because of a lack of backing. Evergrande was successful in raising around $8 billion by August, according to a report from Bloomberg, but it is just a drop in the pan compared to what it still owes. NOW WATCH: WATCH: How any business can use live shopping to net thousands of dollars per stream, said every tether coin was fully backed by US dollars in bank accounts. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. document.write(''); Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. How Ethereum's evolution impacts crypto markets. We do not give personalized investment advice or other financial advice. Stablecoins are cryptocurrencies that are pegged to fiat currency on a one-to-one basis. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, . Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. The company is currently under investigation by multiple law enforcement agencies, including the U.S. Department of Justice and the Federal Bureau of Investigation. With Tether we are welcoming all that. Probing the intersection of crypto and government. Evergrande is just the latest major Chinese firm to have serious problems due to apparent fraud or mismanagement. This was later repaid by Bitfinex. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. An additional 20% reduction is to show up on the company's Q2 report. Tether grants you a limited license to access and make personal use of the Site. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. According to Reuters, around 50% of Tethers $62.8 billion in held assets at the beginning of July 2021, was backed by commercial paper and certificates of deposit. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. In absolute terms, the sizes look something like this: A chart like the one above doesnt give a sense of the rate of growth for each, but this does: Bitcoin and USDT look somewhat related, but does one move as a function of the other? Got a confidential news tip? That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. Lab leak theory: 3 years on, will we ever know where COVID came from? As demand for tether grew, market participants started to question whether that was the case. Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent. The latest moves in crypto markets, in context. A commercial paper report from Evergrande at the end of 2021 showed its main unit had $32 billion, just around 10% of its total liabilities. Weve got lots of inquiries and heard lots of discussion, but have not seen any active participation, said Deborah Cunningham at Federated Hermes.Until last week we hadnt really heard of them, said a trader at a large bank. Data is a real-time snapshot *Data is delayed at least 15 minutes. At the end of 2020, it had $32 billion worth of commercial paper. Which countries in the EU are buying the most electric cars? Approximately half of Tethers $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. This license does not include nor permit your resale or commercial use of the Site or its contents. Well, think of a detective in a movie who takes a corkboard, some photos and a lot of white strings to put all the parts of a story together. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Perhaps, if one were to scale tether on a different Y-axis like so: Perhaps the tail wags the dog. For critics of Tether, the new economy of digital assets is based on the worlds oldest profession: real estate speculation. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information. This article is excerpted from The Node, CoinDesks daily roundup of the most pivotal stories in blockchain and crypto news. Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. He is also now CTO of cryptocurrency exchange Bitfinex. "Tether said they have no Evergrande exposure," Cramer acknowledged. Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent in corporate bonds, funds and precious metals. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities. Your weekly wrap of Web3 news and trends. Chinas loose and reactive (at best) financial regulatory environment is one reason anxiety around Tether has largely centered on whether it holds Chinese commercial paper in general not just whether it holds Evergrandes. "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. Tether has vehemently dismissed the claims and has stated it maintains the full value of the reserves backing its stablecoin supply. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. I think one time, Stanley mentioned when he saw employees on downtime he . "While old information about Tether's reserves and so on is public, it keeps growing," Ardoino said. ; ; Vergleich; ; ; ; The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. It was news to us.. The developer on Thursday applied to suspend trading of that unit's. Thus, it has grown 19-fold in a matter of two dozen months. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Sign up for The Node, our daily newsletter bringing you the biggest crypto news and ideas. This type of debt financing is back in the limelight as China's second largest property developer Evergrande teeters on the brink of default. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. Critics say it's not enough. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. Before falling into a major crisis, Chinese property developers had issued commercial paper worth 3.6 trillion yuan ($556 billion) in 202020% higher from 2019. "An industry is not an industry if there is only one player, instead having many players with different offerings with different use cases is really helpful in a moment when you have to talk with the regulator," Ardoino said. var pid588602 = window.pid588602 || rnd; Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. Regulators are starting to pay greater attention to stablecoins digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets and some observers have raised concerns about the tokens liquidity in a time of stress. The information on this website is subject to change without notice. Crypto investors need to be alert while the Evergrande situation unfolds even if they don't personally own tether because the stablecoin is used to purchase bitcoin and ether, Cramer said. But the firm has not clarified the exact details of its debtors. And despite it seeming as though the stablecoins are in competition, Ardoino believes this will be key to success with regulators. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. You can subscribe to get the full newsletter here. HONG KONG (Reuters) - Tether, the world's largest 'stablecoin', said in a statement it does not hold any commercial paper or securities issued by embattled developer China Evergrande Group, as regulatory scrutiny into risks from this type of token grow. News and analysis for the professional investor. Be a smarter, safer investor in eight weeks. Just last month, Bitfinex, Tethers parent company, tried to block CoinDesk from accessing the specifics of its commercial paper holdings by filing a petition in New York Supreme Court. The US Office of the Comptroller of the Currency has released guidance saying that banks can take deposits from stablecoin issuers only if the coins are fully backed by reserves. In fact, Tether, has been accused multiple times that their stablecoin is not backed by dollar reserves in the full amount of its market cap of $69 billion. Tether had stated since its launch in 2014 that its tokens were fully backed by US dollars in bank accounts, before pivoting in February 2019 to say that its reserves included traditional currency, cash equivalents and other assets and receivables. What financial advisors need to know about crypto. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. No, I think this theory is baloney. By signing up, you will receive emails about CoinDesk product updates, events and marketing and you agree to our, Bankman-Fried Should Have Only Flip Phone, Website Whitelist, DOJ Says, With Congress Impotent, Courts Are the Only Option for Fighting SEC Overreach, Silvergate Closes SEN Platform Institutions Used to Move Money to Crypto Exchanges, Binance.US Is Operating 'Unregistered Securities Exchange,' SEC Official Says. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. and other data for a number of reasons, such as keeping FT Sites reliable and secure, Regardless of what commercial paper you hold, bonds and commercial paper would take a hit and some issuers may even fold," tweeted Adam Cochran, partner at Cinneamhain Ventures. Investors aren't only looking at audits, there's also regulation. In a blog post a few days after its reserves report was released, Hoegner said the commercial paper that the company held was purchased through recognised issuance programmes, the vast majority highly rated, and that there were limits on individual issuers and regional exposures. Tether said that it funnelled roughly half its reserves into commercial paper. First Mover The latest moves in crypto markets, in context. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. Cramer stressed he still sees potential for cryptocurrencies to go "mainstream," but believes it's important to lock in at least some gains while they're still there. Overall, the studio has a watchful eye. Tethers defenders can say that even if one were to assume Tether spent half of every dollar it is said to have taken in over the past two years on commercial paper in China, that would be under one-fifth of new issuances and 4% of the market. While the embattled housing giant ultimately made its scheduled payment of $148 million, questions persist about the long-term prospects for it and other real estate developers in China. Evergrande, which has total liabilities of more than $300 billion, is also in the spotlight as it scrambles to raise funds, teetering between a messy meltdown with far-reaching impacts, a managed collapse or a government bailout. personalising content and ads, providing social media features and to Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. Markets cant function without transparent information flows, full stop. Which countries have banned TikTok, and why? As we have indicated in our published statements and our most recent assurance attestation with a reporting date of June 30, 2021, the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.. Evergrande is a major property developer in China, and beyond real estate, it has multiple other business units operating in industries such as health-care services and electric vehicles. "But tons of Chinese businesses stand to get crushed by this fiasco, and they have Evergrande exposure, and that could spell real trouble if the dominoes fall here.". Evergrande is a major property developer in China, and beyond real estate, it has multiple other business units operating in industries such as health-care services and electric vehicles. Chinese real estate developers are some of the world's biggest issuers of commercial paper. There is a chance that were currently staring down the barrel of the next financial meltdown.. What financial advisors need to know about crypto. cookies Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. "There is an entire world outside of the US," Ardoino said. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. A Division of NBCUniversal. But tether's growth of around 3,350% since early 2019 is seen as reason to celebrate. "It's impossible to reach these levels of success in such a short time without genuine organic interest and really wide demand from the broader crypto trading industry," Paolo Ardoino, Tether's chief technology officer, told Insider in a recent interview. Stablecoin Tether clarified that while they do hold commercial paper, none of it is from Evergrande. Now onto the crypto context, if you have not guess it already, Tether's USDT that tracks the value of the US dollar is backed by a significant amount of Chinese commercial paper. Crypto Long &. He takes the lead in the majority of the company's communications, while the CEO and CFO stay firmly in the background. Tether grants you a limited license to access and make personal use of the Site. Siddharth Venkataramakrishnan and Joe Rennison. As we have indicated in our published statements and in our most recent assurance attestation with a reporting date of June 30, 2021, the vast majority of the commercial paper held by Tether is in . The Evergrande Group is the second-largest property developer in China by sales. CoinDesk journalists are not allowed to purchase stock outright in DCG. The $1.1tn commercial paper market is vital for large companies looking to raise cash for short-term needs such as payroll and inventories. Reuters described Evergrande as "the biggest issuer of commercial papers". var abkw = window.abkw || ''; "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.".