0.3% drop in assets 'could render Tether technically insolvent': WSJ
Jean Eaglesham and Vicky Ge Huang of The Wall Street Journal suggested that such a "thin cushion of equity" could cause chaos on the market if Tether's liabilities were to outweigh its assets.
New
A Wall Street Journal (WSJ) article claimed that Tether's balance sheet is in such a position that even a 0.3% decline in the value of its reserve assets could "render Tether technically insolvent".< /p>
In a Saturday report, WSJ reporters Jean Eaglesham and Vicky Ge Huang focused on the murky nature of Tether (USDT) reserves and its long-awaited audit that has been ongoing since 2017.
Eaglesham and Huang suggested that such a "thin cushion of equity" could wreak havoc on the market, should Tether's liabilities outweigh its assets:
“A 0.3% decline in assets could render Tether technically insolvent – a development that skeptics say could reduce investor confidence and spur increased redemptions.”
As of this writing, Tether has $67.74 billion in assets and $67.54 billion in liabilities, which is a difference of just $191 million, according to the Tether website. Tether.
Tether's chief technology officer, Paolo Ardoino, however, played down the severity of Tether's tight margins, telling the publication that he expects its capital to "grow significantly over the next few months. adding:
"I don't think we are the systemic risk in the [crypto] system."
Ardoino also pointed out that the company had no problems redeeming client funds and managed to redeem $7 billion in just 24 hours during a recent crypto market crash.
Tether's website currently states that 79.62% of its reserves are backed by cash, cash equivalents, other short-term deposits, and commercial paper. The rest consists of 8.36% of other investments, including unspecified...
Jean Eaglesham and Vicky Ge Huang of The Wall Street Journal suggested that such a "thin cushion of equity" could cause chaos on the market if Tether's liabilities were to outweigh its assets.
New
A Wall Street Journal (WSJ) article claimed that Tether's balance sheet is in such a position that even a 0.3% decline in the value of its reserve assets could "render Tether technically insolvent".< /p>
In a Saturday report, WSJ reporters Jean Eaglesham and Vicky Ge Huang focused on the murky nature of Tether (USDT) reserves and its long-awaited audit that has been ongoing since 2017.
Eaglesham and Huang suggested that such a "thin cushion of equity" could wreak havoc on the market, should Tether's liabilities outweigh its assets:
“A 0.3% decline in assets could render Tether technically insolvent – a development that skeptics say could reduce investor confidence and spur increased redemptions.”
As of this writing, Tether has $67.74 billion in assets and $67.54 billion in liabilities, which is a difference of just $191 million, according to the Tether website. Tether.
Tether's chief technology officer, Paolo Ardoino, however, played down the severity of Tether's tight margins, telling the publication that he expects its capital to "grow significantly over the next few months. adding:
"I don't think we are the systemic risk in the [crypto] system."
Ardoino also pointed out that the company had no problems redeeming client funds and managed to redeem $7 billion in just 24 hours during a recent crypto market crash.
Tether's website currently states that 79.62% of its reserves are backed by cash, cash equivalents, other short-term deposits, and commercial paper. The rest consists of 8.36% of other investments, including unspecified...
What's Your Reaction?
