[mwill]

Do people in crypto sincerely believe Tether is backed? I'm not being sarcastic here, I'm genuinely asking. I'm a bit of a skeptic of how the crypto market has developed overall, and the intentions of the major players, so I keep reminding myself that I'm biased, but I haven't believed Tether is even remotely close to being fully backed for a long while, and I've just sort of assumed everyone who's 'bought in' to the crypto space also knows and just doesn't care, or they think it's 'too big to fail'.

Is that the case or is there genuine belief it is fully/mostly/partly backed?

[Nition]

The pinned top post on reddit.com/r/tether is titled "Tether has always been fully backed and the assurance opinion made available today confirms it once again, and puts Tether ahead of the industry on transparency."

[cuteboy19]

"Tether is fully backed but we won't show you what the backing actually is and we won't allow audits just attestations from some rando Cayman island" didn't quite fit in the title, I suppose.

[lupire]

That's just like Tether's opinion, man.

[scoopertrooper]

Read the comments on that post though.

[xeromal]

That subreddit is strangely low-volume for such a popular coin. The newest posts are 8-9 months old.

[mattdesl]

A lot of pro-crypto users avoid USDT like the plague and assume it will at some point come crashing down (and drag the market down along with it).

[dmichulke]

There are exchanges that refuse to use USDT, with deribit and bitstamp at the top of my head

[londons_explore]

Financially literate people see that tether might be backed by thin air. They're pretty clear on their homepage that "Every Tether token is 100% backed by our reserves, which includes traditional currency and cash equivalents, and may include other assets and receivables from loans made by Tether to third parties.".

"receivables from loans" can be worth nothing if it's a loan to someone with no assets.

I believe the whole thing is intended to be sufficiently backed to not collapse easily, but is by no means 100% backed with actual cash.

[sgt101]

The thing is that someone will know, if someone does know what the level of backing is then they can figure out what the point of collapse would be and that will allow the construction of a scheme to make it collapse. If they can do that then there is a bunch of money to be made.

[piva00]

> "receivables from loans" can be worth nothing if it's a loan to someone with no assets.

Eerily sounding like CDOs from 2008, collaterised debt obligations.

[usednet]

No, but when many major exchanges only have USDT pairs people are forced to use it.

[dropnerd]

there are some markets you can't participate in without holding usdt, so for some, it's a calculated risk

why anyone would keep usdt if not actively trading is beyond me

[BbzzbB]

"Yield farming" (covered puts) is why.

[vmception]

Generally Western people do not believe in Tether. People believe in it regionally.

The counter argument is that Tether's growth is the exact same as USDC's growth and other stablecoin's growth, especially those that are structured in the exact same way, with 1:1 redeemability for fiat somewhere. Some of those, people like the level of validation they show, others have undermined trust and never show the level of validation that people want.

Tethers are primarily created upon deposit into Bitfinex. Any fiat deposit. And are only destroyed upon redemption, but people rarely do that because they often just trade out or sell the Tethers. This is akin/analogous to Robinhood creating a RobinBucks whenever a deposit hits. We would see the growth of RobinBucks redeemable 1:1 for dollars. We don't see that because Robinhood and other exchanges don't do it that way. But if a popular exchange did that, we would see what that really looks like and say "ah, this isn't strange actually, we just weren't used to this level of transparency". Redemptions would be low because people don't really leave their brokerage/investing accounts, they just sit in cash waiting to buy a dip... in their brokerage accounts.

Finally, multiple US authorities have looked into Tether multiple times. Typically their fines have been about a combination of A) not being 100% backed by dollars at some point in time and B) not disclosing that. Meaning that at one point and subsequently, Tether did match their level of review, and at one point was backed 100%. Tether has had skepticism from the day it was created nearly 10 years ago, and a US authority got all the information was like "well that one time in 2018 we didn't like that". Tether is not 100% backed by dollars, it mostly is though. The standard is better than other respected financial institutions.

Let there be a run, I don't like to use Tether. I don't like algorithmic stablecoins more. There are options now, those options are holding up. Regardless, Tether isn't as complicated as people think. There are other reasons to avoid Tether and all centralized stablecoins that can be frozen address by address, or by losing access to their bank account. Remember when that was the criticism? Probably not.

Its also easy to see how and why it does work so swimmingly, despite all the questions and criticism. And thats because someone can arb really well and reliably.

[shkkmo]

> Meaning that at one point and subsequently, Tether did match their leel of review, and at one point was backed 100%. Tether has had skepticism from the day it was created nearly 10 years ago, and a US authority got all the information was like "well that one time in 2018 we didn't like that". Tether is not 100% backed by dollars, it mostly is though.

This is some serious spin and misinformation. I can't believe you'd post this with a straight face.

The "100% USD backing" was at best more like 67% at the end of 2021, the rest is "commercial paper".

The "US authority" (OAG) was more like: you lied repeatedly about how you were backed, here's a big fine and you aren't allowed to do business here (New York) anymore.

Edit: The only reason we know that Tether was 2/3rds backed at the end of 2021 is because they are required to share that information as part of the settlement with the OAG.

[Lifelarper]

What do you think the financial standing is of a company that since 2015 has taken bitcoins and given people tokens valued at the current btc/usd price?

They are essentially taking shorts on bitcoin over the last 7 years.

[h2odragon]

There are people "in crypto" who believe the FDIC will make good any losses on their investments; which they hold because "crypto can't be controlled or monitored by governments!"

I'm expecting the talking heads to have to spend time on "why there won't be a bitcoin bailout" today or tomorrow.

[xur17]

> There are people "in crypto" who believe the FDIC will make good any losses on their investments

Do you have a source for this? I'm heavily involved "in crypto", and have not seen any indications of beliefs like this.