evergrande tether commercial paper evergrande tether commercial paper

Since Tether doesnt disclose specifics about the commercial paper that substantially backs its stablecoin, this is a bit like serving a houseguest a sandwich and loudly assuring them that it is absolutely NOT made from diseased horsemeat. Balancing Innovation and Regulation: Why a Risk-Based Approach to Crypto Could Benefit America, Crypto Price Predictions, March 2023: Altcoins Are About to Take a Wild Turn, Top 10 Telegram Channels for Crypto Signals in 2023, Binance Accused of Malpractices Similar to FTX, Navigating Crypto Taxes Made Easy & Cheap: Meet Cryptiony. There is a chance that were currently staring down the barrel of the next financial meltdown.. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. We use USDT leads the stablecoin market by trading volume and acts as the top base-pair currency for trading across several large crypto exchanges, including Binance, FTX, and others. According to Bloomberg BW, stablecoin issuer Tether has extended billions of dollars in loans to Chinese companies. Though its main product since its founding in the 1990s has been housing, Evergrande has grown into a huge conglomerate with products ranging from bottled water to electric cars to a soccer team. Smart navigation app uses 3D sound to guide blind people. The company also denied holding any Evergrande debt and claims to hold only commercial paper issued by A-2 and above-rated companies, which it claims to be risk-free. Your weekly wrap of Web3 news and trends. It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. Please enter your email address. But the firm has not clarified the exact details of its debtors. Evergrande, for its part, is the largest commercial paper issuer in China's real estate market, owning some $32 billion worth of commercial paper at the end of last year. Sign up for The Node, our daily newsletter bringing you the biggest crypto news and ideas. In February, the operator and the related trading platform Bitfinex pledged to offer more transparency on its reserves under the terms of an $18.5m settlement with the New York attorney-generals office, leading to the most recent disclosures last month. But he did lay out his timeline expectations for regulation. read more. Tethers are today, and have always been, fully backed by assets sufficient to cover the amount of tethers in circulation, Hoegner said of its latest disclosure. Data is a real-time snapshot *Data is delayed at least 15 minutes. The Node The biggest crypto news and ideas of the day. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. 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. The US Treasury is expected to release an in-depth report on stablecoins any day now. 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. 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. The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. and other data for a number of reasons, such as keeping FT Sites reliable and secure, Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Our Standards: The Thomson Reuters Trust Principles. How Ethereum's evolution impacts crypto markets. The most recent report from accountant Moore Cayman shows more than 50% of the assets backing a tether coin were commercial paper and certificates of deposit, rather than dollars, or short-term government paper. We are completely confident.". CoinDesk journalists are not allowed to purchase stock outright in DCG. His role is much broader than tech chief. In total, Tether holds 52% US Treasury bonds, 37% commercial paper, with the remainder in cash and money market funds. The biggest crypto news and ideas of the day. Tether's USDT remains the dominant stablecoin in the market despite the FUD surrounding the coin. Be a smarter, safer investor in eight weeks. As one of the first stablecoins, Tether's experienced its fair share of controversies, particularly surrounding the reserves that back its eponymous coin. The systematic suppression that characterizes Chinese markets adds an opaque but potentially huge risk for the holders of any Chinese asset even if that risk is wrapped up in a supposed stablecoin. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. First Mover The latest moves in crypto markets, in context. 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 . Thus, it has grown 19-fold in a matter of two dozen months. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". News and analysis for the professional investor. "Right now, owning crypto is what's known as a 'crowded' trade and I don't want you to lose money if this space keeps getting hit by Evergrande's contagion worries," he said. Over the past two years, yet another headwind has entered the China mix. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. It is now the third-largest cryptocurrency by market capitalisation, according to CoinMarketCap, making up the bulk of stablecoin volume. About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. Tether has vehemently dismissed the claims and has stated it maintains the full value of the reserves backing its stablecoin supply. Cash made up only 2.9 per cent, according to the companys disclosure. Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. The downgrade from A to AA applies both to the bonds and their issuer rating. "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. Stablecoins are cryptocurrencies that are pegged to fiat currency on a one-to-one basis. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? The transformation of value in the digital age. Your weekly wrap of Web3 news and trends. Ardoino clarified that Tether does not hold Evergrande's commercial paper. The company is currently under investigation by multiple law enforcement agencies, including the U.S. Department of Justice and the Federal Bureau of Investigation. All Rights Reserved. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. var plc588602 = window.plc588602 || 0; Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. With Tether we are welcoming all that. "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.". 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, About half of Tethers roughly $75 billion in assets, Tether (the company) said back in September. 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. Markets cant function without transparent information flows, full stop. But these are the same rating agencies that are rating the US Treasuries," Ardoino said. Tether has faced scrutiny from authorities and investigators in the past. At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". No, I think this theory is baloney. What should a secular society really look like? Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. The biggest crypto news and ideas of the day. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. Holiday events will take place, but it is silently frowned upon to join in. 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. Meanwhile, based on data from the Peoples Bank of China, Chinese commercial paper ended Q2 in 2021 at around $900 billion, up from just shy of $700 billion that same quarter in 2019, a gain of less than a third. And despite it seeming as though the stablecoins are in competition, Ardoino believes this will be key to success with regulators. Elon Musks Twitter is dying a slow and tedious death. This stability means they offer an accessible - if boring - entry and exit point to the crypto world. In the NYAG investigation, the company was found to be conducting illegal activities in New York. 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. madcap@cnbc.com. Questions for Cramer? "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. Call Cramer: 1-800-743-CNBC, Want to take a deep dive into Cramer's world? 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"There is an entire world outside of the US," Ardoino said. 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. Hoegner said the commercial paper reserves included amounts held internationally with further sub-custody at major global institutions. JPMorgans analysts said the large commercial paper holdings may suggest that Tether is struggling to find a bank willing to take its cash as a deposit. Critics say it's not enough. Sign up for free newsletters and get more CNBC delivered to your inbox. News and analysis for the professional investor. Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. Which countries in the EU are buying the most electric cars? "The only interest of Tether is maintaining a liquid and extremely safe portfolio," he said. Tether, Bitcoin and Chinese Commercial Paper at Scale Webinars Indices Markets Finance Technology Web3 Policy Sponsored Content Upcoming event Yuga Labs, Google and More TV & Videos TV & Videos. Evergrande, China's second-largest property developer, is to blame. Overall, the studio has a watchful eye. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. "Tether said they have no Evergrande exposure," Cramer acknowledged. 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. Investors aren't only looking at audits, there's also regulation. Debate swirls about whether that impact would spread beyond China, but theres broad agreement that impact within the country would be near catastrophic. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. 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. Additionally, it is China's largest issuer of commercial paper with more than $300 billion in debt, according to reports. 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. 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. Approximately half of Tether's $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. 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. Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans! "The vast majority of the commercial paper held by Tether is in A-2 and above rated issuers. Siddharth Venkataramakrishnan and Joe Rennison. The developer on Thursday applied to suspend trading of that unit's onshore corporate bonds following a downgrade, which market participants said indicated an increasing likelihood of defaults and restructuring. 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. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. The stablecoin issuer Tether this week declared that it doesnt hold short-term debt issued by troubled Chinese real estate developer Evergrande. Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. 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. But this reported accumulation has largely gone unnoticed on Wall Street, according to several of the biggest players in the market including bank traders, analysts and money market funds. Bitcoin, meanwhile, remained above all-time highs by about 5.5%. 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. Polygon (MATIC) Price Dropped 9% in One Day so Wheres It Headed Next? The latest moves in crypto markets, in context. 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.. Probing the intersection of crypto and government. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. When Tether launched in 2014, it said every tether coin was fully backed by US dollars in bank accounts. 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. 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. Even the chance to speak to Ardoino is rare. According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. Decentral Media, Inc. is not an investment advisor. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. Evergrande has now had to suspend trading of. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. For critics of Tether, the new economy of digital assets is based on the worlds oldest profession: real estate speculation. Your Use of the Site. The $1.1tn commercial paper market is vital for large companies looking to raise cash for short-term needs such as payroll and inventories. 2023 CNBC LLC. CoinDesk journalists are not allowed to purchase stock outright in DCG. Hundreds of customers have protested in front of the companys offices alleging mistreatment or fraud. Probing the intersection of crypto and government. Who to fire? Get this delivered to your inbox, and more info about our products and services. Krypto. The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Tether is a typical design firm that will value the client's needs over their employees. This comes as the Evergrande debt crisis and rival stablecoins shine a spotlight on Tether's reserves again. promo Which countries have banned TikTok, and why? Evergrande is the biggest issuer of commercial papers. More Articles Evergrande has now had to suspend trading of that unit's onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. This is not the first time concerns about the true value of USDT have emerged. clarified that Tether does not hold Evergrande's commercial paper. For Ardoino and the team, this highlights the crypto community's faith in Tether. The downgrade from A to AA applies both to the bonds and their issuer rating. As a result, even though Tether says it doesn't hold commercial paper issued by Evergrande, an upheaval in the commercial paper market could still have wider . "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. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so, the company said. Such holdings of companies short-term debt would make it the seventh largest in the world. The transformation of value in the digital age. But Stuart Hoegner, Tethers general counsel, said: With respect to reputation, we believe we are seeing the opposite: more and more counterparties are comfortable with Tether and our transparency initiatives and are keen to work with us.. The developer on Thursday applied to suspend trading of that unit's. Bitcoin and other cryptocurrencies were crashing Monday amid a global selloff in risk assets. 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. Got a confidential news tip? At the end of 2020, it had $32 billion worth of commercial paper. You can subscribe to get the full newsletter here. Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. 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. document.write(''); Stablecoin Tether says it does not hold any commercial paper from Evergrande in recent a statement. Get the latest business insights from Dun & Bradstreet. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself. However, Tether is very secretive about its holdings, only disclosing that it does hold international commercial paper. 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. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. All quotes delayed a minimum of 15 minutes. A Bloomberg report has claimed to have found that Tether holds billions of dollars worth of Chinese commercial paper. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. 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. "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. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. 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. But since it's unsecured, there is also very little recourse for investors if an issuer does default. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities. "So if A1 commercial paper rated by a US Agency is considered safe [then] why is where the issuer located matters?". He also shares his expectations on stablecoin regulation and competition. 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. How Ethereum's evolution impacts crypto markets. So while Evergrande may not be on the books, the concern is that the commercial paper may be from other real estate firms. 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. 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. Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. Tether's market capitalization surged 357% in the last year to around $69 billion. He also said that Tether did not hold any commercial paper issued by cryptocurrency exchanges or affiliated entities. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. In an interview, stablecoin Tether's tech chief Paolo Ardoino lays out the case for holding commercial paper in its reserves. Given Tethers record to this point, that may take a while. What financial advisors need to know about crypto. 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. 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. Head to consensus.coindesk.com to register and buy your pass now. ConsenSys to Launch zkEVM Testnet as Battle for ZK Supremacy Heats Up, Binance Continues to Battle FUD as US Senators Go After Balance Sheets, Coinbase Moves Into More Stable World of Asset Management with Latest Acquisition, EOS Pumps 10% Amid Broader Market Correction due to EVM Speculation. HONG KONG, Sept 16 (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 (3333.HK), as regulatory scrutiny into risks from this type of token grow. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. Just two years ago, USDTs market cap was a mere $4 billion. A week after its stablecoin briefly lost its 1:1 peg with the U.S. Dollar, Tether's Q1 2022 assurance report shows it has reduced the commercial paper in its USDT reserves by 16.8%.. As of March 31, Tether 's $82 billion reserves were 86% cash and cash equivalents, the rest includes $4 billion in corporate bonds, $3 billion secured loans, and $5 billion other investments like cryptocurrencies .