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The developer on Thursday applied to suspend trading of that unit's. The downgrade from A to AA applies both to the bonds and their issuer rating. While Tether (the company) said back in September it doesnt hold Evergrande commercial paper, about a month ago Bloomberg BusinessWeek reported Tethers holdings included billions of dollars of short-term loans to large Chinese companies something money-market funds avoid.. Stablecoin Tether says holds no Evergrande commercial paper - Yahoo! Your weekly wrap of Web3 news and trends. But tether's growth of around 3,350% since early 2019 is seen as reason to celebrate. Today, Bloomberg BusinessWeek reported that stablecoin issuer Tether owns billions of dollars worth of commercial paper issued by large Chinese firms and that it may be using these assets to back up its stablecoin reserves. How the biggest companies plan mass lay-offs, The benefits of revealing neurodiversity in the workplace, Tim Peake: I do not see us having a problem getting to Mars, Michelle Yeoh: Finally we are being seen, Our ski trip made me question my life choices, Apocalypse then: lessons from history in tackling climate shocks, Stablecoins: bitcoin for squares has its own downsides. Tether Denies Holding Commercial Paper Issued by Troubled - NXTmine A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. As one of the first stablecoins, Tether's experienced its fair share of controversies, particularly surrounding the reserves that back its eponymous coin. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. Siddharth Venkataramakrishnan and Joe Rennison. Get this delivered to your inbox, and more info about our products and services. Thus, it has grown 19-fold in a matter of two dozen months. 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. and other data for a number of reasons, such as keeping FT Sites reliable and secure, The information on this website is subject to change without notice. The $1.1tn commercial paper market is vital for large companies looking to raise cash for short-term needs such as payroll and inventories. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. Tether said that it funnelled roughly half its reserves into commercial paper. No, I think this theory is baloney. It seems increasingly likely that Evergrande is fated instead for the glue factory. 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. This story was seen first on BeInCrypto Join our Telegram Group and get trading signals, a free trading course and more stories like this on BeInCrypto, Ukraine Latest: Russia Continues Efforts to Encircle Bakhmut, INSIGHT-Before fatal collapse, Turkish building had skirted code thanks to Erdogan policy, In Chicago, adapting electric buses to winters challenges, Ukraine ally Kallas fights for reelection in Estonia vote, Global race to boost electric vehicle range in cold weather. Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. Stablecoin Tether says holds no Evergrande commercial paper The downgrade from A to AA applies both to the bonds and their issuer rating. The enshittification of apps is real. The Chinese real-estate giant is facing down $300 billion in debt that it cant pay back. 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. We do not give personalized investment advice or other financial advice. Last March, the Federal Reserve stepped in to buy commercial paper as the pandemic led money market funds, one of the biggest buyers, to pull back. 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. Probing the intersection of crypto and government. Those questions can only be answered with a little more transparency from the stablecoins issuer. 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. Or perhaps there are other ways to explain things. 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. Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Evergrande is the biggest issuer of commercial papers. Cramer urges investors to take some crypto profits, citing Evergrande-related risks, struggling Chinese property developer Evergrande, stablecoin that's pegged to the U.S. dollar, third-largest cryptocurrency by market value. USDT is designed to be pegged to U.S. dollar at a 1:1 ratio, thereby making it possible to trade crypto assets without relying on traditional banking services by providing a stable unit of account. 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. 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. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. 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. Your Use of the Site. Head to consensus.coindesk.com to register and buy your pass now. Tether has been beset by transparency concerns in the past as well. Stay up to date with what you want to know. 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. We are completely confident.". Such holdings of companies short-term debt would make it the seventh largest in the world. Neither Tether nor Bitfinex admitted wrongdoing. A wave of smaller stock frauds from 2010-2016 were chronicled in the documentary The China Hustle, and Luckin Coffee put an exclamation point on the trend in 2019. Explainer: How China Evergrande's debt troubles pose a - Reuters Tether says it doesn't hold any commercial paper issued by Evergrande "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. Get the latest business insights from Dun & Bradstreet. This is not the first time concerns about the true value of USDT have emerged. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". "The problem with tether is that it's backed by various holdings and roughly half of those are commercial paper short-term loans and much of that is believed to be, but we don't know, Chinese commercial paper," Cramer said. Tether's market capitalization surged 357% in the last year to around $69 billion. Your Use of the Site. 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. Tether still expects to be the first to secure an external financial statement audit, which it has been exploring since 2017, but it won't necessarily be from one of the Big Four accountants. But is it bad? It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Concerns intensified after Evergrande admitted in June it did not pay some commercial paper on time, and news in July a Chinese court froze a $20 million bank deposit held by the firm on the . Sell some, stay long the rest, then let's wait and see if China changes its attitude toward an Evergrande bailout.". Editing by Mark Potter, How China's new No.2 hastened the end of Xi's zero-COVID policy, Silvergate suspends crypto payments network; shares fall after-hours, Bank of Canada to hold rates steady at 4.50% through this year, Analysis: Sharp drop in equity premium may mark return of 60/40 portfolio, As space junk threat grows, government and investors seek solutions, Brazil's Petrobras faces legal risks after halting asset sales -lawyers, Nissan and Mexican workers agree to 9% raise at Morelos plant, union says, EIA blames crude oil blending, under-reported output for high adjustments in US data, American Airlines, flight attendants union seek mediation in contract negotiations, Exclusive news, data and analytics for financial market professionals. "I know the crypto-lovers never want to hear me say sell, but if you've got a big gain as I did, well, I'm begging you to," the "Mad Money" host said. How Ethereum's evolution impacts crypto markets. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. 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. Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance. But the firm has not clarified the exact details of its debtors. 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. A government bailout is also a possibility. Sign up for free newsletters and get more CNBC delivered to your inbox. "So if A1 commercial paper rated by a US Agency is considered safe [then] why is where the issuer located matters?". While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, . Find company research, competitor information, contact details & financial data for Tether, Inc. of Seattle, WA. Is Evergrande's Fall Influencing the Depeg Issue for Tether? Evergrandes main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. David Z. Morris is CoinDesk's Chief Insights Columnist. We want to hear from you. Reuters described Evergrande as "the biggest issuer of commercial papers". But these are the same rating agencies that are rating the US Treasuries," Ardoino said. This article is excerpted from The Node, CoinDesks daily roundup of the most pivotal stories in blockchain and crypto news. Since Evergrande's potential collapse could have broad implications for the commercial paper market and Tether's most recent attestation contains no breakdown of either the geographical exposure or investment category of the paper it holds, market participants are concerned about the risks to Tether's books. Perhaps, if one were to scale tether on a different Y-axis like so: Perhaps the tail wags the dog. While Tether (the company) said back in September it doesn't hold Evergrande commercial paper, about a month ago Bloomberg BusinessWeek reported Tether's holdings included "billions of. Probing the intersection of crypto and government. When Tether launched in 2014, it said every tether coin was fully backed by US dollars in bank accounts. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. 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. All quotes delayed a minimum of 15 minutes. This type of debt financing is back in the limelight as China's second largest property developer Evergrande teeters on the brink of default. Your weekly wrap of Web3 news and trends. "We are working with an amazing counterparty that is extremely professional and has a deep knowledge of traditional finance and also crypto markets and the blockchain industry and so on. But this is not just about one company: Even if Tether doesnt specifically hold any of Evergrandes short-term debt, it could have huge exposure in the form of other Chinese obligations. Got a confidential news tip? var plc588602 = window.plc588602 || 0; 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. China Evergrande Group Flashes Default Warnings, Tether Says We Don't Tether's USDT remains the dominant stablecoin in the market despite the FUD surrounding the coin. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. Questions for Cramer? It was news to us.. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Stablecoin Tether says holds no Evergrande commercial paper - Yahoo! 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. CoinDesk journalists are not allowed to purchase stock outright in DCG. Tether has amply demonstrated, most recently through assurance opinions from [auditor] Moore Cayman, that all issued tethers are, in fact, fully reserved, he added. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. In a series of tweets about the Evergrande news, partner at Cinnemhian Ventures Adam Cochran, said that IF either Tether or USDC did meltdown in a global collapse though, itd actually be bullish for crypto, as if you couldnt use them to cash out, people would just start bulk converting them into BTC/ETH regardless of price., Cochran added that, despite not being a well-known name in the West, the failure of Evergrande could have massive fallout. 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. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. Commercial paper is a form of unsecured, short-term debt issued by companies that doesn't need to be registered with the Securities and Exchange Commission (SEC) as long as it matures before nine months. Additionally, it is China's largest issuer of commercial paper with more than $300 billion in debt, according to reports. The outlet estimated that the actual figure could be even higher, since it has other units, which also issue 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 stablecoin issuer Tether this week declared that it doesnt hold short-term debt issued by troubled Chinese real estate developer Evergrande. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. His role is much broader than tech chief. Tether is the third-largest cryptocurrency by market value, trailing only ether and bitcoin, which are second and first, respectively. It earned this title after the Chinese government banned the company from issuing longer-term debt. 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. Disclosures from cryptocurrency provider Tether suggest it has become one of the worlds largest investors in the US commercial paper market, rubbing shoulders with the likes of fund managers Vanguard and BlackRock and dwarfing the investments of tech giants like Google and Apple, according to estimates from JPMorgan. 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 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. Tether Reports 17% Decrease in Commercial Paper | Alexandria var pid588602 = window.pid588602 || rnd; What should a secular society really look like?