Apologies if I'm missing something, is this discussing the new Bank Term Funding Program or some other guarantee?
(edit: I see the phrasing "fully protected by the FDIC" -- this might be the general idea that depositors won't lose anything, but not literally that FDIC is officially extending insurance, I think?)
Anyway, for the BTFP, I think it is generally available to all banks. Seems to allow borrowing against underwater assets at par value, at roughly 4.6% interest.
While it came together over the weekend[1] there are some guardrails -- including that it only applies to collateral that was already owned at the time of announcement (so far...).
[1] based on zero evidence, I wouldn't be surprised if they have stuff like this war-gamed and sketched out in case
I'm not sure on the time of that but the Fed press release the evening of the same day has the exception and "all depositors will be made whole" phrasing:
Recognizing these are some unique circumstances, over the last week, expectations for next week's FOMC meeting swung from a near-certain +25bp, to 75% +50bp / 25% +25bp, to 60% +25bp / 40% 0bp. Tomorrow, February's CPI data will be released which might help collapse this wave function.
Disclaimer that I'm a bit of a Tether skeptic, but if I'm wrong and they either were in, or have been able to get to, a fully-collateralized position of mostly treasuries and are earning 5% interest while paying 0% on USDT, good for them and good for regular people who won't be left holding bags.
I'll always consider Tether in the context of their July 2021 CNBC interview with Deirdre Bosa. Timestamps are relative to the copy at https://www.youtube.com/watch?v=ZBEqyiO35cQ
I don't think they've said who the commercial paper counterparties were and claim it was an important trade secret. Traders in the US commercial paper market say they had never heard of the Tether folks which was odd given their attestations would have given them a top 10 global holding (17:20). Explanation, they use intermediaries. Will they give names or details on the intermediaries? Can't, trade secret.
Did they hold Chinese commercial paper? Dodged the question twice (6:30 and re-ask 7:35).
Where are the CEO and CFO of this company that holds $60B of assets? Why don't they talk to media? (24:40)
But hopefully we'll get assurance regarding the reserves soon. They were excited to promise a formal audit in "months not years" during that interview (27:42)... looking forward to this spring so the audit can be released before we hit two years.
They’ve exited the position in ‘commercial paper’ that couldn’t possibly have been true?
What proof verified by third parties is there that any of their assertions are true? There never has been one and there never will be.
Tether are an obvious fraud run by fraudsters, caught several times committing fraud and already banned in many jurisdictions. They deserve zero trust and when this ecosystem collapses they will go to 0.
Yes USDT has management flaws but these are caused by limitations placed on their access to banking services - they have a long history of making sure they can maintain peg in spite of constant attacks from regulatory authorities, short sellers, and negative media publicity.
No, I don’t recommend using USDT. But with the regulated coins being operated much more poorly than USDT, it may be the best option in certain situations.
I would say the flaws are caused by deliberate fraud, and I don't trust their figures or those of crypto exchanges, given they have close relations with several large exchanges.
Left image: USDC: kitchen cabinet with a glass door; you can see on the inside a stack of dishes has mostly toppled, held up only so long as the door is closed
Right image: USDT: photo of kitchen cabinets with completely opaque wooden doors
That meme is a great distillation of the cognitive bias at work here. USDC operates transparently so when there's a minor problem they admit it immediately and publicly, giving people something to overreact to. USDT is totally opaque and has outright lied in the past, so they keep saying everything is fine and people have no choice but to either trust them completely or don't touch crypto.
Same thing happens when autocracies with closed systems and closed markets who pump propaganda about Western liberalized democratic republics with open markets and open systems.
The systems that highlights and addresses problems with more transparency is the one that will be more robust and not blow up, adjustments can be made and it is a pressure release valve.
No - thats what I'm saying. They use a bot to buy/sell USDT to keep the price 1:1... And then they redeem anything purchased by the bot.
Effectively, they will redeem only for themselves.
Could be a neat way to do no KYC or ownership verification or dealing with messy bank transfers to dodgy people, etc. Hides the location and/or existance of funds from redeemers and those able to trace money movements too.
Or could be a way to hide a delicately balanced stack of cards...
I don’t find market making or liquidity providing to be controversial
it still requires capital from their reserves to do what you describe, purchasing USDT for $1 each
the redemption mechanism is an incentive on its own. when Tether is below $1 purchase it yourself (pushing up the price of Tether) and go to the redemption window and get $1 for it regardless.
I was trying to look up a Tesla special case (where upgrading the infotainment unit removes the radio unless an additional $500 upgrade is purchased) and learned that several EV manufacturers have already removed AM radio because electric motors interfere with that frequency range.
My understanding, anyone is welcome to correct: the 51% attack doesn't apply, but that's because there is a central party with full control from the start.
CBDCs are digital currencies but do not have to be cryptocurrencies with distributed consensus, blockchain, proof of work, etc.
Instead they are likely to be completely centralized; at an (absurd) extreme a global Excel sheet with edit access enabled for the Treasury Secretary and Fed Chair.
But then how is it different from regular currencies?
Take the US dollar. It's mostly numbers in databases. Physical cash (dollar bills and coins) is a tiny fraction of the total amount of money in circulation. By now all major currencies are "digital", and most likely all non-major currencies too.
mine was set to 500 (not 5000) as well. I'd moved on from lastpass earlier this year but didn't delete my account... though I suppose in that case I'd wonder if I'd deleted in time, or if they really deleted all my info.
Also frustrating that they decided to drop this update on December 22.
with URLs and last-accessed times being plaintext? I suppose "items in your vault" is doing a lot of work there if they don't count urls as "in" the vault.
(edit: I see the phrasing "fully protected by the FDIC" -- this might be the general idea that depositors won't lose anything, but not literally that FDIC is officially extending insurance, I think?)
Anyway, for the BTFP, I think it is generally available to all banks. Seems to allow borrowing against underwater assets at par value, at roughly 4.6% interest.
https://www.federalreserve.gov/newsevents/pressreleases/file...
While it came together over the weekend[1] there are some guardrails -- including that it only applies to collateral that was already owned at the time of announcement (so far...).
[1] based on zero evidence, I wouldn't be surprised if they have stuff like this war-gamed and sketched out in case