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Tether's Golden Bitcoin, WTH is Backing All of This? (Money Stuff, Matt Levine)www.bloomberg.com/opinion/newsletters/2025-11-11/the-hedge-funds-are-hiring
856 sats \ 12 comments \ @denlillaapan 12 Nov econ

"Backing" is a weird, unimportant term in the money sphere, so we can ignore that. But here are some fun Tether-related news mediated via our wonderful Mr. Levine

If you gave me $100 for safekeeping, and I promised to give you back the $100 without interest in a year, and in the meantime I parked your $100 in a savings account at a big US bank, you’d be like “yeah sure sounds right.” That’s the normal place to park dollars for safekeeping. If I parked your $100 in a money market mutual fund, or in US Treasury bills, that would be good and normal too. Microsoft Corp. bonds? Ehh maybe, sure, I guess, though there is more risk there.

In gold? in bitcoin? UUUUGGG, noes. Or?

I was under the impression that Tether was just buying gold and bitcoin with its company profits, but apparently it's with USDT-backed funds too? (Doesn't make it that different from a bank, which they're kind of trying to be, or the Saylor trade, which everyone loves to hate on #1279997, #1279207)

I keep saying this, but Tether really does have the simplest and best business in the world: It can borrow $180 billion at 0% interest, invest it in one-month Treasury bills at like 4%, take no risk whatsoever, collect $7 billion of interest a year and spend it all on yachts. But it does like to make things more complicated.

Yah, gotta get yo-self some golden corn

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33 sats \ 5 replies \ @Undisciplined 12 Nov

What I had understood about their reserve strategy is that they held a basket of goods that could guarantee 1:1 conversion.

If they're getting 4% on bonds, then they could go about 96% bonds and 4% bitcoin, right?

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42 sats \ 2 replies \ @denlillaapan OP 12 Nov

hm... I suppose, yeah. (Though bills only pay return on redemption, and bonds every six month, so technically they'd be short their commitment -- in a liquidity sense -- for parts of the year).

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9 sats \ 1 reply \ @Undisciplined 12 Nov

Bonds are very liquid, though. They shouldn't have to wait for redemption to get the present discounted value of the yield.

Also, they have lots of exit requirements, right? So, Tether only needs enough liquidity to cover what's eligible for cash redemption.

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42 sats \ 0 replies \ @denlillaapan OP 12 Nov

true-true-true

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42 sats \ 0 replies \ @brent 12 Nov

I listened to an interview with their CEO, who described their strategy. They buy short-term bonds, take the coupon profit, and buy bitcoin with it. They now hold over 90,000 BTC; they are a financial behemoth.

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42 sats \ 0 replies \ @Scoresby 12 Nov

supposedly they are actually only holding 77% cash and cash equivalents...

#1280553

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12 sats \ 3 replies \ @freetx 12 Nov

I don't understand his argument, and can't bypass the paywall. Can you clarify:

  1. Is he claiming that Tether is not backed by US Treasuries?
  2. Side question: How is this criticism of Tether different than any 0% reserve retail bank?
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31 sats \ 1 reply \ @Scoresby 12 Nov

In early 2019, Tether changed their terms from saying:

10.164   Tether's website on 12 February 2019 "Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD."

To:

11.623   Tether's website on 19 March 2019 "Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD." (#1115791)

If you go to this website you can see what they claim as their reserves:

It seems to be quite a mix of assets. (Note that this only pertains to reserves for USDT)

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144 sats \ 0 replies \ @freetx 12 Nov

Great chart. So they are 77% backed with Cash (or equiv) and remainder Loans/Gold/Bitcoin. Honestly looks like a pretty safe allocation.

I would point out that Gold/Bitcoin doesn't produce a yield, so there is no giant incentive for them to put too much into those.

As the article snarkly points out. They have a great business model, which is borrowing and 0% and investing in Treasuries at 4.5% - point being their incentives are to hold as much treasuries as possible to maximize their profit.

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10 sats \ 0 replies \ @denlillaapan OP 12 Nov
and can't bypass the paywall.

newsletterhunt link at the bottom.

  1. Sort of. He's saying that it's weird to plunge what's supposed to be 1:1 dollar into non-dollar denominated assets (with crazy volatility)
  2. entirely, since a) banks aren't 0 reserve -- don't get hung up on that non-binding Fed announcement a few years ago -- b) Tether isn't regulated like a bank (I think?) or having support of the LOLR, so presumably that there's a different level of risk if you promise a 1-for-1 stablecoin (that somehow no longer is one for one).

But in practice, yes you're right: nothing bad will come of this since the run has to be SO GODDAMN MASSIVE for them to be in actual trouble.

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14 sats \ 0 replies \ @grayruby 12 Nov

That's interesting. I also thought they only bought gold and Bitcoin with their profits.

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0 sats \ 0 replies \ @0xbitcoiner 12 Nov
This objection strikes me as obviously correct, but I think that some people will disagree.

I’m sure some people would disagree, but if they can’t invest "their" money in “safe” assets, how are they supposed to make a profit? Personally, I don’t think they should be allowed to invest, they’d have to change their whole business model, because those “safe” assets aren’t really safe, and they could get burned if the economy goes south.

Also, don’t forget that the 1:1 redemption guarantee only applies when you swap USDT directly with them, not on exchanges. To redeem directly you need at least 100K, and if you do it on an exchange you’ve got the spread.

So basically, for regular folks, it’s not really a 1:1 conversion, plus there’s still a risk of losing funds.

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