Tether is Backed by Billions of Dollars, Managed by a Wall Street Firm
By CoinUnited
The most widely traded cryptocurrency in the world is backed by trillions of dollars in Treasurys, which are being exchanged on Wall Street.
According to those in the know, Tether Holdings Ltd., the mysterious Hong Kong-based owner of the stablecoin tether, employs Cantor Fitzgerald to manage its $39 billion bond portfolio. There are little details available on how Tether handled the assets.
According to one of the persons, the company started transferring its reserves into the Wall Street brokerage in late 2021, just around the time it negotiated a settlement with a regulator.
Tether's stability is essential to the cryptocurrency ecosystem, as each coin is pegged to be worth $1 at all times. For this reason, tether's success is contingent on the confidence of investors in the underlying assets. Like other organizations, it needs complex methods of portfolio management and trading.
The portfolio is evidence that some Wall Street corporations are ready to overlook the regulatory and governance problems that have defined the crypto field in exchange for the opportunity to manage some of the billions of dollars in assets that some cryptocurrency companies have accumulated.
After a string of crypto business disasters, U.S. authorities warned banks last month that they would be considering bids to enter the market with extreme care.
When it comes to doing business with Tether, other U.S. banks have been hesitant at times. After several years as the company's correspondent bank for its Taiwanese accounts, Wells Fargo & Co. cut ties with the Taiwanese branch in 2017.
Tether is a crucial part of the cryptocurrency industry, but the corporation has been cagey about who owns it and what it possesses. The Wall Street Journal revealed last week that four men owned 86% of the firm and that its management lacked competence in handling finances on that magnitude.
One of the agreements required it to start disclosing more information about its assets. On Thursday, the business revealed its most current financials, claiming that it has $67 billion in reserves as of December 31, 2022, enough to back the $66.1 billion tether issued. This follows a profitable fourth quarter in which the company made $70 million.
Commercial paper holdings were eliminated, loan exposure was cut, and the company's 59% portfolio allocation to Treasurys totaled $39.2 billion. Money market funds, cash, reverse repurchase agreements, corporate bonds, and precious metals made up the remainder of its assets.
For quite some time, Cantor, a privately held global financial institution and one of the main intermediates for Wall Street traders, has had its eye on cryptocurrency. In 2017, the company announced that its internal futures exchange will begin trading contracts pegged to the price of bitcoin.
BGC Partners, a subsidiary of Cantor, announced last year in a conference call with investors that CEO Howard Lutnick planned to start a cryptocurrency exchange in the first quarter of 2023.
The company's history of boldness has led it to go into more precarious fields of business. In 2016, the business paid $22.5 million to end a probe into its sports-betting subsidiary's possible complicity in unlawful gambling and money laundering.
Tether gains a company with extensive ties to the Treasury market by acquiring Cantor. Cantor holds the status of one of the 25 so-called principal dealers for the U.S. Treasurys market, which enables them to conduct business with the Federal Reserve Bank of New York directly and to underwrite sales of U.S. government debt.
According to those in the know, Tether Holdings Ltd., the mysterious Hong Kong-based owner of the stablecoin tether, employs Cantor Fitzgerald to manage its $39 billion bond portfolio. There are little details available on how Tether handled the assets.
According to one of the persons, the company started transferring its reserves into the Wall Street brokerage in late 2021, just around the time it negotiated a settlement with a regulator.
Tether's stability is essential to the cryptocurrency ecosystem, as each coin is pegged to be worth $1 at all times. For this reason, tether's success is contingent on the confidence of investors in the underlying assets. Like other organizations, it needs complex methods of portfolio management and trading.
The portfolio is evidence that some Wall Street corporations are ready to overlook the regulatory and governance problems that have defined the crypto field in exchange for the opportunity to manage some of the billions of dollars in assets that some cryptocurrency companies have accumulated.
After a string of crypto business disasters, U.S. authorities warned banks last month that they would be considering bids to enter the market with extreme care.
When it comes to doing business with Tether, other U.S. banks have been hesitant at times. After several years as the company's correspondent bank for its Taiwanese accounts, Wells Fargo & Co. cut ties with the Taiwanese branch in 2017.
Tether is a crucial part of the cryptocurrency industry, but the corporation has been cagey about who owns it and what it possesses. The Wall Street Journal revealed last week that four men owned 86% of the firm and that its management lacked competence in handling finances on that magnitude.
One of the agreements required it to start disclosing more information about its assets. On Thursday, the business revealed its most current financials, claiming that it has $67 billion in reserves as of December 31, 2022, enough to back the $66.1 billion tether issued. This follows a profitable fourth quarter in which the company made $70 million.
Commercial paper holdings were eliminated, loan exposure was cut, and the company's 59% portfolio allocation to Treasurys totaled $39.2 billion. Money market funds, cash, reverse repurchase agreements, corporate bonds, and precious metals made up the remainder of its assets.
For quite some time, Cantor, a privately held global financial institution and one of the main intermediates for Wall Street traders, has had its eye on cryptocurrency. In 2017, the company announced that its internal futures exchange will begin trading contracts pegged to the price of bitcoin.
BGC Partners, a subsidiary of Cantor, announced last year in a conference call with investors that CEO Howard Lutnick planned to start a cryptocurrency exchange in the first quarter of 2023.
The company's history of boldness has led it to go into more precarious fields of business. In 2016, the business paid $22.5 million to end a probe into its sports-betting subsidiary's possible complicity in unlawful gambling and money laundering.
Tether gains a company with extensive ties to the Treasury market by acquiring Cantor. Cantor holds the status of one of the 25 so-called principal dealers for the U.S. Treasurys market, which enables them to conduct business with the Federal Reserve Bank of New York directly and to underwrite sales of U.S. government debt.