Selling massive amounts of debt with no additional demand means the required return must be higher.
[1] Stable Coins ⊄ Blockchains: https://www.linkedin.com/pulse/stable-coins-blockchains-seba...
Some sort of behavior by Tether and others?
Are you asking how laws work?
I think I’m missing what scenario people are thinking of in general.
If you mean Tether holders redeeming them for US dollars, that would involve selling treasuries but I doubt it would drive the price down that much. That's a very liquid market.
a crypto liquidation results in more people going to Tether. "tethered" and "tethering" has been a verb in the crypto space for like 10 years
when market demand of tether is too great the value goes about $1.00 and the organization relies on arbitragers to deposit more to cause the minting of Tethers at $1.00 and selling it into the open market if the price is above $1.00 pushing the market rate back down to $1.00
Tethers in existence still continue to grow in that scenario
Its nearly 1:1 backing, most of the time, even a mass redemption event of Tethers will be orderly and fine. those crisis of confidence have alreay occurred, those stress tests have already happened, far faaaar beyond what any bank would survive
all fiat collateralized stablecoins function the same way and there are many case studies, actual events that happened, that show it occurring orderly, uneventfully.
I'm not sure of this. USDT can only be minted by tether [0] (line 406), hopefully when they acquire more treasuries.
I am not exactly sure where the price of USDT come from and I am pretty sure there is not only one. But I would guess it is an aggregate of the prices on exchanges.
The chainlink oracle [1] is probably the most authoritative one.
- [0] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c...
- [1] https://data.chain.link/feeds/ethereum/mainnet/usdt-usd
when tethers and trading at $1.04 or anything higher than $1.00
arbitrageurs wire money to their account at the Tether organization (bitfinex, otc services) to instruct the organization to mint Tether
the organization does everything necessary: takes the deposited money and buys US treasuries, mints the equivalent amount of Tethers and gives those tethers to the customer
The customer deposited $1 and received 1 tether. Some exchange venues have people rushing to buy 1 Tether for $1.04
Customer sells their tether to them and has some other form of crypto that they can try to get back into dollars and do it all over again, until flooding the market with Tether supply back to $1.00
this happens all day every day for a decade, more pronounced during panic selling periods
There is a huge demand for dollars by individuals outside of the US. Countries where people do not really trust their banks and currencies.
Even in the Euro zone, most saving accounts will give you about 1% after taxes. So why not going with USDT, USDC or EURC and get about 5% on a relatively safe lending platform.
You can also provide liquidity on a stable stablecoin/stablecoin pair on a reputable decentralized exchange and get some of the fees.
There are surely many other "safe" ways.
If you live in Switzerland you're probably not gonna bother but it is more transparent and safer than than what a lot of people have access to around the world.
I know the DAI stablecoin was already very popular as a saving account in Argentina around 2018-2019.
its just like your brokerage account, imagine if Schwab issued a stablecoin for every deposit someone made and only delete some of that stablecoin when they redeem
you'll find that people deposit and trade, they keep their balances there their entire life and beyond. when they trade, they are selling the stablecoin to someone else, someone else could redeem but they aren't either. stablecoins are liquid and useful, they have passive income capabilities while holding your principle value
so for Schwab's reporting, the balances always increase as people deposit more whenever they get their paycheck
this is what you're seeing with Tether, and all other leading stablecoins, as they grow at the same pace as they capture the same market
when actual traditional finance brokerage firms start issuing stablecoins, you'll see the same thing, the stablecoin just offers transparent real time behavior into their customer deposits
the only time stablecoin balances go down, and subsequently treasuries are offloaded behind the scenes, is when someone redeems a stablecoin for fiat currency. this isn't necessary, people don't want fiat or don't need to get fiat by redeeming it
https://fortune.com/crypto/2024/11/25/commerce-nominee-howar...
https://www.wsj.com/finance/currencies/wall-street-firm-over...
If you doubt their attestation, it is more reasonable to doubt their claimed total assets before worrying about the breakdown of their investments.
US debt is about as stable as the dollar itself, so to their crypto customers buying bonds is a no-op. Any yield is pure profit for Tether itself.
How greedy do you have to be to look at that and say "yeah, well they could be getting bigger returns with an actively managed portfolio?"
I'm pretty sure Tether was holding less cash than they said multiple times, and at multiple points it was just a house of cards where they were inflating the price of BTC on their own, but I'm also guessing by now they've had made enough to cover.
> How greedy do you have to be to look at that and say "yeah, well they could be getting bigger returns with an actively managed portfolio?"
This is banking and finance. Greed only stops when you run into legislative limits, and sometimes, not even there.
Isnt the whole idea this is a stable coin?
Luckily for the crypto people, Tether makes it near impossible to turn their fantasy money into real money
Based on the Q2 2025 attestation [1] it looks like they have about 162B in assets and 157B in liabilities which leaves ~5B in shareholder equity. Even if they hold most of those assets in treasuries, they probably have an egregiously high return on shareholder equity.
(Fun fact: I think this puts their leverage ratio as high as banks during the 2008 GFC. But treasuries should theoretically be safer than subprime mortgage loans).
Equities would give a higher return on average, they don't really work when the liabilities can get called at any time. Tether has to be able to produce money for people exchanging their tether.
If you were in their position and I gave you 150 billion dollars on the condition that I can withdraw that 150 billion dollars at any time. You'd probably also park it in a short-term money market fund. If you put it in equities and it dropped 1%, you'd be on the hook for 1.5 billion.
[1] https://tether.io/news/tether-issues-20b-in-usdt-ytd-becomes...
A huge understatement, don't you think? ;)
They may have somewhat sketchily put money into bitcoin at times though.
https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasu...
Explanation: Tether is not holding a stack of paper bonds in a safe. They must use some broker (or similar) to operate and hold the treasuries for them. And they are hiding how this is working. So the parent's question is who do they (Tether) hold it (treasuries) through (as in what broker/investment bank/whatever).
My answer is nobody outside Tether knows. And they are one of the dodgiest companies out there. We are totally audited, bro, trust me. They could be doing leveraged investments. Or they could just be Madoff 2.0. Nobody really knows. And the US government seems to be looking the other way because they are desperate for any buyers of treasuries.
USDC by contrast are open in their holdings, through Blackrock.
Large invisible "dark matter" financial holdings are the sort of thing that blow up badly during a financial crisis.
Tether banks with Cantor Fitzgerald, a primary dealer with the Federal Reserve. From 2023: https://www.wsj.com/finance/currencies/wall-street-firm-over...
Every quarter, BDO confirms Tether's assets by going to Tether's banking partners directly.
There is no reason not to do an audit except when it’s a scam/all money gone. No accounting company wants to do their audit - guess why.
If you look at their yearly profits and liquid cash, clearly Tether is backed by something. This is not the same as saying that they have full transparency but you cannot have those profits in dollars out of thin air.
Usually the correct answer is the simplest - fraud.
Any evidence that they actually own?
“ In its own attestation report for Q2 2025, Tether stated it holds about US$127 billion in U.S. Treasuries” this is the only source. And tbh anyone can “attest” it owns billions of whatever. Again, no audit because there is nothing there. They only attest through BDO Italia. And attestations are easily gamed. Usually worthless, but useful for usdt hodlers.
I wonder why they use bdo? See below their history.
About bdo:
In the UK, a former senior manager at BDO (in the UK member firm) was banned for 20 years for creating false audit documents and mis-using signatures.
In July 2025 the UK regulator Financial Reporting Council (FRC) flagged the BDO network as having audit quality “significantly short of expectations”. Only about half the audits reviewed were deemed satisfactory
You didn't answer the audit question, which is really important.
I mean they might, maybe. But you can't point to the law as proof of something when the thing you're defending doesn't follow the law.
The most reasonable explanation is that it is a Ponzi scheme. Which will appear to work right until it doesn't. And if it stops working, the entire crypto universe will implode.
That said, the current President and many who are close to him have significant portions of money invested in crypto. That depend on Tether. There is therefore a reasonable expectation that the US government will covertly back Tether for the next several years if there is any prospect of a collapse.
This expectation is supported by Trump's declaration last March of creating a "strategic crypto reserve" for the USA. See https://www.whitehouse.gov/presidential-actions/2025/03/esta.... On the face of it, this executive order only helps crypto by taking some of it out of circulation. But the provision in 3C of creating "budget neutral" strategies for acquiring more bitcoin, could easily cover converting actual USD to Tether. Particularly if the Tether was available at a discount to the USD.
Otherwise I'm not sure how you can be so certain.
Take your conspiratorial trutherism elsewhere.
On a timeline deemed appropriate by the law makers is making a lot of heavy lifting here. The (GOP) lawmakers won't lift a finger to do anything unless the Leader says so.
To me the obvious explanation is that they would not pass an honest audit, and hope having the CEO of their primary brokerage in the Cabinet will help them cheat.
Like, even Enron and Wirecard passed audits, so it's pretty weird that Tether can't.
To put that in perspective, that's what Saudi Aramco or Samsung might get as revenues.
But hey, don't just trust them, trust their bank and it's 33 year old deputy CEO who, when people pointed out that that number didn't match up with international banking numbers, said that was because those people didn't understand the banking licenses being used in The Bahamas, and that there were two, though he couldn't remember their names, or which one they had, or whether they maybe had both.
And when that looked hilariously bad, they removed his info from the bank's website.
And when that looked bad, they added it back.
And when that looked bad, they removed the bank's whole website, and replaced it with a broken WP template with no working links.
Hey, look, several years after that, go to Deltec's website. "Ultra sophisticated private banking" running on a different WordPress site. "Client login"? "This site can’t be reached Check if there is a typo in ebanking.deltecbank.com. DNS_PROBE_FINISHED_NXDOMAIN". Just as has been the case for years.
"Sounds legit to me" say the bros.
This is ultimately good for the world, good for democracy, and good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey, who have suffered their own currency crises to the great detriment of their citizens. With only an Internet connection, US dollar stablecoins give them property rights which can't be voided through an act of the corrupt ruling class.
Before the tether truthers come out, update your priors. This industry is very different than it was in 2015. It has grown up substantially. The GENIUS act is the largest banking and financial reform of the last 100 years, and the consequences will shape the 21st century and local currencies globally.
Well, except that it ties them to USD, an ultimately doomed currency. The short-term interests are aligned, but they'd be better off with a locally-managed currency and simply banning the USD from being held by either the state or any of its representatives.
It's a luxury opinion to view the USD as trash. It means you have options. USD is the best many people in the world can hope for.
Hell, the USD isn't even managed with americans in mind. We just happen to live here.
If the dollar starts undergoing wild inflation, then the whole world has a whole lot of problems, not just stablecoins.
Tether and their "original" "bank" were in The Bahamas, not the Caymans!
>This is ultimately good for the world, good for democracy, and good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey.
Wow, US has found a gold mine: The super full wallets of Venezuelans, Nigerians and Lebanese! They will buy a trillion of USDT to prop up US debt!
You mentioned 4 countries that are dirt poor and need to buy food, not stablecoins. The people in those countries who have money don't need stablecoins to invest in the US.
However, stablecoins WILL cause unrest in Nigeria, Venezuela, Lebanon, and Turkey as their corrupt local currency completely erodes and the ruling class can no longer extract from their citizens.
China had $776.5B a year ago and has $730.7B now, a roughly 5% drop. They don't seem to "rapidly winding down", unless there's some additional data I'm missing.
Look at the other holders. Belgium and Luxembourg combined have more US debt than China.
If the goal was to crash the US economy by selling their small amount of debt (which likely isn't possible for them to do, despite the rhetoric, they have less than 2% of the total debt), they would also significantly impact of all the countries listed here, which would make them very unpopular indeed:
https://ticdata.treasury.gov/resource-center/data-chart-cent...
There is no other source for estimates of their financial holdings than those attestations. For years, Tether has promised that they are working on an audit. No audit has emerged. This is suspicious because audits aren't particularly hard for legitimate organizations.
People have gone looking for evidence that Tether really has as much as it has said. Nobody has succeeded. For example https://www.bloomberg.com/news/features/2021-10-07/crypto-my.... Which, after noting Tether's settlement for past fraud, and prominent executives with suspicious criminal histories, famously said that Tether "is quilted out of red flags."
And yet, many strongly believe that Tether is for real. Given that nobody has produced evidence of their wealth, I regard this belief as a question of psychology.
Said psychological belief has a simple explanation. We humans have a strong tendency towards cognitive dissonance. Meaning that we reject evidence which questions our sense of identity.
If I'm a bitcoin millionaire, my likely identity includes, "I'm a millionaire." But the financial system does not allow us to directly trade bitcoin. What I can actually trade bitcoin for is Tether. And therefore my belief in my own wealth relies on trusting that Tether is equivalent to money.
How can I support that trust? I can point to someone smart and say, "They believe in Tether, so it must be real!" I can point to someone rich and say, "They believe in Tether, so it must be real!" I can get angry at anyone who doubts Tether. It is easy to observe all three behaviors from people into Crypto.
That Bloomberg article offers an ironic example. Back in 2021, many crypto enthusiasts pointed at Sam Bankman-Fried. Who was both rich and smart, and publicly believed in Tether. Therefore he was quoted on the topic. Today, of course, he is in federal prison for having run a Ponzi scheme. If we behaved logically, any crypto enthusiast who used to look up to him, should be saying, "Wait, am I sure I'm placing my trust in the right place?" But, predictably, few do that. Instead they dismiss this past mistake, and place their trust today in someone else.
Now everyone knows that crypto is full of Ponzi schemes on top of Ponzi schemes. People are often OK with trying to take advantage of the greater fool, because they don't believe that they will be the greater fool. Others see people apparently making money and get in, driven by FOMO. But statistically, most people in a Ponzi scheme will lose money. And yet they will look like really smart people - right until the scheme collapses.
So here is the real question. Does Tether really have the money? Or does the entire infrastructure of crypto Ponzi schemes rest on yet another Ponzi scheme?
Hey, that's not true! They had several audits in progress over time, but had to fire multiple auditors for ... reasons, I guess.
And then they got one completed, but they can't let you see it! Why not? Because uhh, checks notes it's in Mandarin! (I shit you not. Straight out of their own mouths: https://tether.io/news/tether-update/ )
I'm a little surprised that they expected people to forget that translation services exist. But it fits with how people get sucked into a lot of cults, fraudulent cults, MLMs and the like. (I'm obviously listing nefarious uses. Something similar happens in many relationships.)
First get your target (emotionally or financially) invested. Then put them in a position where they have to accept something uncomfortable (investing emotionally even more), or back out. Repeat and intensify
In extreme cases you try to get them to be swallowing a stream of erratic and blatant lies. At that point you can do anything.
Yes. This says that there is likely a direct connection between Trump's erratic behavior and the fanatical loyalty that he inspires. If you trust him, you have to follow his latest whim. And following his latest whim strengthens your trust. Many charismatic leaders do this.
If there is a run on Tether, the US government will step in behind the scenes and buy Tether at a discount. This gives Tether a backstop. It also gives the US government an immediate paper profit (buy Tether for less than a dollar, get a dollar of Tether), which can be used to buy Bitcoin. The sight of Tether successfully redeeming currency and Bitcoin going up will trigger a desire to jump back in, and reverse the cash flow. Allowing the US government to withdraw as much money as was actually put in.
This results in a budget neutral investment in Bitcoin. We put $X into Tether, we got out $X. We also got y% of that as Bitcoin. Exactly as the executive order demands that the government should do.
Trump squeezed Intel for 10%, bullied Tiktok into a sale, and is ordering extrajudicial killings not that far away from the Bahamas.
What is to stop him saying: Tether is sketchily governed (seems true), is secretive and unaudited (seems true?), and holds far too much debt for the USA to be secure (could well be true) — "this is against our national security interests"?
$135bn that Congress can't touch must be really tempting. What stops him just taking it?
Especially since his sense of "national security interests" includes Canada making fun of the USA with clips of Reagan.
(I'm not sure that it would even be the wrong thing to do in a more structured, legal way at least)
mortgages arr regulated, this should be as well.
toomuchtodo•3mo ago