Just two years ago, USDTs market cap was a mere $4 billion. The struggling real estate giant has listed $300 billion in total liabilities and says it needs to find funds quickly. 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. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. Sign up for notifications from Insider! 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. Be a smarter, safer investor in eight weeks. 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. That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. read more. Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. Evergrande, Chinas second-largest property developer by sales, recently warned that it was in danger of defaulting on massive debts. var rnd = window.rnd || Math.floor(Math.random()*10e6); 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 . Evergrande's 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. The biggest crypto news and ideas of the day. 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 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. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. However, as Tethers reserve holdings have been questioned by regulators such as the New York attorney-general in the past, providing banking services to Tether will likely raise reputational risk concerns, wrote the JPMorgan analysts. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. However that's not stopped its popularity. How Ethereum's evolution impacts crypto markets. Lawrence Lewitinn is CoinDesk's managing editor of global capital markets. But these are the same rating agencies that are rating the US Treasuries," Ardoino said. "If tether collapsed, well, then it's going to gut the whole crypto ecosystem," he said. No, I think this theory is baloney. 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. A government bailout is also a possibility. "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. "I think that it's a little bit aggressive, or cocky, to ask that everyone in the world use US agencies, or US auditing companies - otherwise it does not matter, or is not fine," he said. 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.. A Bloomberg report has claimed to have found that Tether holds billions of dollars worth of Chinese commercial paper. About half of Tethers roughly $75 billion in assets, which back USDT, is in commercial paper. Evergrande has now had to suspend trading of. 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. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. Tether is a typical design firm that will value the client's needs over their employees. 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. Tether published its first Reserves Breakdown in March 2021. According to the attorney-generals investigation, there were instances when Tether was not fully backed in the past. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself. 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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. 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. 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. Which countries have banned TikTok, and why? 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. Tethers previous public attestations include various short-term deposits and commercial paper kept as reserves to back the USDT stablecoin. 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. 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. The Node The biggest crypto news and ideas of the day. At the same time, hot topics such as regulation, competition and the Evergrande debt crisis are shining a spotlight on that "old information". 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. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. 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. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. 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 . According to documents received byBloomberg BusinessWeek, Tether has extended billions of dollars in loans to large Chinese companies. "Tether has maintained its stability . "Don't let it become a loss. It has tried to quell the heightened concerns expressed by mainstream financial media regarding its dollar reserves. clarified that Tether does not hold Evergrande's commercial paper. 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. Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28. 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. You will receive a link to create a new password via email. madcap@cnbc.com. 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Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Learn more about Consensus 2023, CoinDesks longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. We do not give personalized investment advice or other financial advice. It seems increasingly likely that Evergrande is fated instead for the glue factory. But the firm has not clarified the exact details of its debtors. 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. recently accused of violating securities laws. It earned this title after the Chinese government banned the company from issuing longer-term debt. Those questions can only be answered with a little more transparency from the stablecoins issuer. Siddharth Venkataramakrishnan and Joe Rennison. David Z. Morris is CoinDesk's Chief Insights Columnist. The US Treasury is expected to release an in-depth report on stablecoins any day now. In fact, Tether claimed earlier in the year that 50% of its reserves come from commercial paper. 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He also shares his expectations on stablecoin regulation and competition. (Reporting by Alun John; Editing by Mark Potter), 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. Evergrande is the biggest issuer of commercial papers. There is a chance that were currently staring down the barrel of the next financial meltdown.. We are completely confident.". See here for a complete list of exchanges and delays. 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. The developer on Thursday applied to suspend trading of that unit's. We use cookies to improve your experience. So while Evergrande may not be on the books, the concern is that the commercial paper may be from other real estate firms. Tether, the largest stablecoin, is a Hong-Kong based stable currency. This was later repaid by Bitfinex. Bitcoin and other cryptocurrencies were crashing Monday amid a global selloff in risk 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. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. 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. Call Cramer: 1-800-743-CNBC, Want to take a deep dive into Cramer's world? Cash made up only 2.9 per cent, according to the companys disclosure. 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. The company has more than $300 billion in total liabilities and recently warned investors it may default on its debts. Hit him up! Got a confidential news tip? Elon Musks Twitter is dying a slow and tedious death. 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. Additionally, it is China's largest issuer of commercial paper with more than $300 billion in debt, according to reports. Yet, does Tether truly own a lot of Chinese commercial paper? Its been going on for a long time one analyst who warned about Evergrandes practices as early as 2012 was temporarily banned from Hong Kong markets by regulators for his reckless claims. Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so, the company said. 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. Chinese real estate developers are some of the worlds biggest issuers of commercial paper. Your Use of the Site. Overall, the studio has a watchful eye. 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. "Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so," the company said. 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 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 . 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. 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 . That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. "Tether said they have no Evergrande exposure," Cramer acknowledged. 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. The stablecoin issuer Tether this week declared that it doesnt hold short-term debt issued by troubled Chinese real estate developer Evergrande. Perhaps, if one were to scale tether on a different Y-axis like so: Perhaps the tail wags the dog.

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