Tether Will Completely Eliminate Collateralized Loans In 2023

Facing the market crisis after the bankruptcy of FTX, a series of companies faced bankruptcy. To manage risk Tether plans to reduce collateralized loans to zero by 2023.

Tether revealed to The Wall Street Journal in a recent interview that its loans stood at $6.1 billion, or 9% of the company’s total assets as of September 30. At that time, company’s total assets reached more than $68 billion.

In response to the most recent attack on the company, Tether reiterated that loans held in the company’s reserves are over-collateralized and secured with highly liquid assets.

“Tether can’t be certain the loans will be paid back, that it could sell the loans to a buyer for dollars in a pinch or that the collateral it holds will be adequate,”

The company said

However, after the series of bankruptcy events that occurred in 2022, in order to manage risk Tether will plan to reduce loans to zero by 2023. Because in fact, the list of loans is increasing. Tether’s rise could make it impossible for them to pay for USDT buybacks in the event of a crisis.

This decision is driven by Tether’s unwavering commitment to serving global crypto users. In addition, this is also seen as a solution to strengthen investor confidence after the collapse of FTX and in the context of other exchanges and crypto companies trying to reassure that they are solvency.

Panic spread on Twitter on Tuesday as Binance struggled to process billions of dollars worth of withdrawals – especially those in USDC. Its CEO, Chanpeng Zhao (CZ), has assured that any withdrawal delays are simply due to the need to swap BUSD to USDC, now that Biannce has reopened USDC withdrawals to users.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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