On Dec. 1, the Wall Street Journal published another attack on the crypto industry, targeting Tether this time.
The outlet claims that the company has “increasingly been lending its own coins to customers rather than selling them for hard currency upfront.”
It added that these loans add risk that the “company may not have enough liquid assets to pay redemptions in a crisis.”
The WSJ claims to have examined Tether’s financial reports, which evidence these loans. The most recent report suggests they reached $6.1 billion as of Sept. 30, which equates to 9% of the company’s total assets.
Tether hit back with a blog post titled “WSJ & CO: The Hypocrisy of Mainstream Media, Asleep at the Wheel of Information.”
WSJ & CO: The Hypocrisy of Mainstream Media, Asleep at the Wheel of Informationhttps://t.co/XS4eCE84I8
— Tether (@Tether_to) December 1, 2022
Tether Bites Back
The majority of the lengthy response was ranting at mainstream media for its failure to predict the demise of major crypto platforms and its repeated targeting of Tether.
However, it did not deny that these secured loans were real. The WSJ wrote that because Tether’s loans of USDT were denominated in USDT, the company was exposed to a decline in the value of the stablecoin.
Regarding those loans and the WSJ coverage, the firm stated:
“This completely misses the mark and mistakes the USDT itself for the collateral that underpins it. Tether’s secured loans are extremely overcollateralized and even backstopped by Tether’s additional equity if needed.”
The company added that the equity was growing quickly. Around 82.45% of total Tether reserves are in “U.S. Treasuries and other cash equivalents whose yields are at multi-year highs,” it added.
Tether explained that its secured loans operate similarly to private banks lending to customers using secured collateral. It added that Tether always requires wide over-collateralization by extremely liquid assets.
“While banks are generally allowed to end up in a fractional reserve scenario, this is not the case for Tether. Tether collateral size and quality ensures that Tether backing remains above 100% at any time.”
In November, Tether also refuted FUD regarding its issuance on the embattled Solana network.
Stablecoin Market Outlook
Tether is still the industry leader for stablecoins, with a market share of 46% and a supply of 65.6 billion USDT.
The total capitalization of all stablecoins has fallen to $142.6 billion, which represents around 16% of the total crypto market cap.
Circle’s USDC is the second largest stablecoin, with a supply of 43.2 billion and a market share of 30%. Both Tether and Circle have seen supplies decrease this year, while Binance has increased its issuance of BUSD, which currently has a supply of 22.3 billion coins.
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