Tether Quietly Resumes Controversial USDT Lending Services, Surprising Market Observers

  • Resumed lending operations spotted in Tether’s quarterly financial update, igniting market skepticism once more.
  • Ongoing concerns about transparency and financial stability resurface amidst Tether’s unexpected move.

Tether, the notable stablecoin issuer, has quietly rebooted its secured lending services, surprising many industry observers given its previous announcement to phase out these services within the year. This reversal came to light through Tether’s latest quarterly financial update, as reported by the Wall Street Journal.

Unexpected Resumption Sparks Discussions

Per the financial update, the stablecoin magnate recorded an uptick in loan assets to $5.5 billion as of June 30, marginally higher than the $5.3 billion noted in the preceding quarter.

This increment was attributed to “a few short-term loan requests from clients with whom [Tether] have cultivated longstanding relationships,” as revealed by a Tether spokesperson.

The lending mechanism entails Tether disbursing loans denominated in its USDT tokens to borrowers—a practice that has previously fanned the flames of skepticism owing to inherent repayment uncertainties and a perceived lack of immediate liquidity for such loans. Moreover, the opacity surrounding the type of collateral furnished by borrowers remains a sticking point.

Crypto Lending’s Rocky Landscape

Historically, several cryptocurrency lending ventures such as Celsius and BlockFi met a bitter end in the preceding year due to a marked market downturn that severely disrupted their operational frameworks. Despite these precedents, Tether has staunchly defended its secured lending blueprint, asserting that the

“secured loans held in its reserves are overcollateralized and covered by extremely liquid assets.”

Nonetheless, a potential failure in Tether’s framework could spell doom for the broader crypto realm, given the paramountcy of its USDT stablecoin.

Tether’s Assurance Amidst Financial Quagmire

In a recent articulation, Tether reasserted its dedication towards the cessation of secured loans from its reserves, albeit without presenting a concrete timeline for this objective. Addressing the resonating concerns, the stablecoin issuer highlighted the accumulation of “more than $3.3 billion in excess reserves” aimed at diminishing secured loan exposure. It further elucidated,

“Anyone with a minimum understanding of financial markets would see how a company having $3.3 billion in excess equity and on track to make a yearly profit of $4 billion is in all effects offsetting the secured loans and retaining such profits within the company balance sheet.”

This response, albeit robust, leaves market participants treading the waters of uncertainty, awaiting Tether’s next move in the unfolding narrative of cryptocurrency lending services.

Connect with Collin Brown on X (Twitter) for valuable market insights and frequent updates!
Crypto News Flash does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned.

About Author

Collin is a seasoned Bitcoin investor who entered the crypto scene during its early stages and has since become a veteran trader in both the cryptocurrency and forex markets. His journey began in 2012 when he made his first investment in Bitcoin, marking the beginning of his deep-rooted passion for blockchain technology and digital assets. With a mission to demystify the intricacies of blockchain for the masses, Collin endeavors to bring the world of cryptocurrencies closer to everyone. His insightful reports are dedicated to shedding light on the latest developments and innovations within the realms of Bitcoin, Ethereum, Ripple (XRP), IOTA, VeChain, Cardano, Hedera, and numerous other cryptocurrencies. Collin's in-depth analysis and commitment to providing accessible information make him a trusted source for both novice and experienced crypto enthusiasts. Collin's academic background includes a Master's Degree in Business Education, which has equipped him with a solid foundation in financial markets and investment strategies. Over the past decade, he has amassed invaluable experience working with various startups across the globe, enriching his knowledge and understanding of the ever-evolving cryptocurrency landscape. With his wealth of expertise and dedication to empowering others with crypto knowledge, Collin continues to be a driving force in the cryptocurrency community.

Comments are closed.