Altcoins News
By James Thorp
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Tether Expressed, Tether releases quarterly information about the composition of its reserves backing issued tether tokens
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Adam Cochran replied, “You'll see a lot of mixed takes on this today. But, this is roughly the kind of backing model I would have guessed, and I am personally more comfortable…
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He further pointing to how no business can run on 1:1 direct backing on only cash and be safe without doing something with those assets, as secure operations cost money.
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Tether has claimed they are backed 1:1 not strictly cash backed 1:1. Seeing this type of breakdown is good.
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In finance "cash equivalents" are called that because they are as good as cash while doing other things.
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Many times if you try and withdraw cash in volume from a bank they can't service it. So the risk of equivalents is the same as cash but they are more productive assets.
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75% in cash reserves and equivalents is basically the inverse of banks. Banks in the US are only required to keep 10% in reserve ratio as cash or cash equivalents.
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Having multiple assets also means they can spread out the risk of having any one mode of backing fail. Which can happen even in big financial systems.
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I honestly expected to see a lot more secured loans or corporate bonds on this list. Like I would have been ok if those started to reach the 30% mark.
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The conclusion was that: The risk does not invalidate crypto.
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Though the report does not look transparent, Paolo claims it is by stating: Tether_to all-in for transparency. Can’t beat this. Also, stated, crypto community asked.
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Paolo also had his say about the Elon Musk stir: In retrospect I was growing quite worried in the past weeks by the enormous influence that Elon had on Bitcoin and crypto…
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