The company is currently under investigation by multiple law enforcement agencies, including the U.S. Department of Justice and the Federal Bureau of Investigation. 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. The Evergrande Group is the second-largest property developer in China by sales. Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. 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. We do not give personalized investment advice or other financial advice. A government bailout is also a possibility. It was news to us.. 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. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. Our Standards: The Thomson Reuters Trust Principles. Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so, the company said. "There is an entire world outside of the US," Ardoino said. CoinDesk journalists are not allowed to purchase stock outright in DCG. Or perhaps there are other ways to explain things. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. The value of loans backing Tether's stablecoin reserves could be a risk factor for the crypto industry. The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. CoinDesk journalists are not allowed to purchase stock outright in DCG. 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. 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. "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. "We are always working with regulators and we are expecting additional or proper regulations coming in the next few months, to one year," Ardoino said. "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.". 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. 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. Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. 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. 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. Please enter your email address. To counteract that line of questioning, Tether secured attestations on its financial statements - a review from an independent accountant, rather than a full audit - on the reserves. The Node The biggest crypto news and ideas of the day. 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. In those two years, bitcoins market cap has gone up eight times, from $159 billion to $1.3 trillion. and other data for a number of reasons, such as keeping FT Sites reliable and secure, Evergrande has now had to suspend trading of that units onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. 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. "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. Such holdings of companies short-term debt would make it the seventh largest in the world. 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. But since it's unsecured, there is also very little recourse for investors if an issuer does default. "The vast majority of the commercial paper held by Tether is . A Division of NBCUniversal. Find company research, competitor information, contact details & financial data for Tether, Inc. of Seattle, WA. BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back. Money Reimagined The transformation of value in the digital age. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . "So if A1 commercial paper rated by a US Agency is considered safe [then] why is where the issuer located matters?". Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. When Tether launched in 2014, it said every tether coin was fully backed by US dollars in bank accounts. Evergrande has now had to suspend trading of. 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. According to Bloomberg BW, stablecoin issuer Tether has extended billions of dollars in loans to Chinese companies. promo 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? Yet, does Tether truly own a lot of Chinese commercial paper? It goes something like this: About half of all bitcoin trades against stablecoin tether (USDT), according to data from CryptoCompare. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. HONGKONG Tether, the worlds 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. In May, it provided a breakdown of these reserves, which Tether claims included just under $30bn in commercial paper, a short-dated investment similar to cash. Tether has been beset by transparency concerns in the past as well. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. Your Use of the Site. That should refute anyone who could try to argue USDT may have fueled Chinas boom in commercial paper. The biggest crypto news and ideas of the day. "So Tether is extremely glad that there is a USDC, that there is Paxos and all the other stablecoins, because that is how we become an industry.". A growing swarm of debris in space has led the U.S. government to attempt to set new space hygiene norms, while private companies are also investing in ways to tackle the messy orbital environment. Commercial paper typically has low default rates. 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 are completely confident.". News and analysis for the professional investor. Chinese real estate developers are some of the world's biggest issuers of commercial paper. Just two years ago, USDTs market cap was a mere $4 billion. Tether grants you a limited license to access and make personal use of the Site. 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. Tether is a typical design firm that will value the client's needs over their employees. Evergrande is just the latest major Chinese firm to have serious problems due to apparent fraud or mismanagement. You can subscribe to get the full newsletter here. But the firm has not clarified the exact details of its debtors. 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"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. 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. Questions for Cramer? All Rights Reserved. The New York attorney-generals office declined to comment on whether Tethers disclosure, which came in the form of a single-page PDF, was sufficient to meet its requirement on reporting as part of Februarys settlement. 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. Even the chance to speak to Ardoino is rare. 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. 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. 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. 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. 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. Evergrande has failed to execute on the promises backing its roughly $300 billion in debt, particularly in housing. Critics say it's not enough. Sign up for free newsletters and get more CNBC delivered to your inbox. How Ethereum's evolution impacts crypto markets. Lab leak theory: 3 years on, will we ever know where COVID came from? 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. He is also now CTO of cryptocurrency exchange Bitfinex. 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. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Holiday events will take place, but it is silently frowned upon to join in. It expanded by borrowing aggressively, including during periods when Chinas economic outlook was seen in much rosier terms globally than it is now. Get this delivered to your inbox, and more info about our products and services. read more. Now, the second-largest stablecoin, circle (USDC), is heading in a different direction, choosing to only use cash reserves and cash equivalents. We believe that this is the only way that these technologies are really created and can become mainstream.". 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. Bitcoin, meanwhile, remained above all-time highs by about 5.5%. 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. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself.
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