Tether is now the 17th largest holder of US debt

https://twitter.com/paoloardoino/status/1983455972636111011

by wslh • 9 months ago

102 133 9 months ago

toomuchtodo2• 9 months ago

nikhizzle2• 9 months ago

Armchair economist here - one implication of this is that a crypto liquidation will cause global interest rates to spike at a time when they will need to be lower to calm the markets.

Selling massive amounts of debt with no additional demand means the required return must be higher.

heisgone• 9 months ago

deleted

onlyrealcuzzo• 9 months ago

The US Treasury market is BY FAR the deepest most liquid market in the world.

wslh5• 9 months ago

Good point but it seems like Tether is very healthy, it has the double of daily volume than Bitcoin now and doesn't really depend on crypto rails [1].

[1] Stable Coins ⊄ Blockchains: https://www.linkedin.com/pulse/stable-coins-blockchains-seba...

delabay12• 9 months ago

Stablecoins are now a regulated industry with laws in place to address this very concern. Tether is currently not compliant, but as the largest player in the space, has a great incentive to maintain its dominance.

axus• 9 months ago

Regulated industry.. like banking, stocks, and mortgage origination!

duxup2• 9 months ago

What would the regulation ... enforce?

Some sort of behavior by Tether and others?

SideburnsOfDoom• 9 months ago

The USA is going to have a fantastic fiscal reputation if/when that has happened.

tim3334• 9 months ago

I'm not sure I see that, depending what you mean by crypto liquidation. If you mean the prices of dogecoin etc. falling then that mostly just effects the number of Tethers changing hands between one speculator and another and wouldn't really affect the bond market.

If you mean Tether holders redeeming them for US dollars, that would involve selling treasuries but I doubt it would drive the price down that much. That's a very liquid market.

nikhizzle2• 9 months ago

I mean tether redemptions. Hedge funds liquidating treasuries last year significantly distorted yields for a short while.

yieldcrv4• 9 months ago

that's very armchair indeed

a crypto liquidation results in more people going to Tether. "tethered" and "tethering" has been a verb in the crypto space for like 10 years

when market demand of tether is too great the value goes about $1.00 and the organization relies on arbitragers to deposit more to cause the minting of Tethers at $1.00 and selling it into the open market if the price is above $1.00 pushing the market rate back down to $1.00

Tethers in existence still continue to grow in that scenario

Its nearly 1:1 backing, most of the time, even a mass redemption event of Tethers will be orderly and fine. those crisis of confidence have alreay occurred, those stress tests have already happened, far faaaar beyond what any bank would survive

all fiat collateralized stablecoins function the same way and there are many case studies, actual events that happened, that show it occurring orderly, uneventfully.

sunshine-o4• 9 months ago

when market demand of tether is too great the value goes about $1.00 and the organization relies on arbitragers to deposit more to cause the minting of Tethers at $1.00 and selling it into the open market if the price is above $1.00 pushing the market rate back down to $1.00

I'm not sure of this. USDT can only be minted by tether [0] (line 406), hopefully when they acquire more treasuries.

I am not exactly sure where the price of USDT come from and I am pretty sure there is not only one. But I would guess it is an aggregate of the prices on exchanges.

The chainlink oracle [1] is probably the most authoritative one.

- [0] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c...

- [1] https://data.chain.link/feeds/ethereum/mainnet/usdt-usd

pjc502• 9 months ago

Hmm. Who do they hold it through? USDC are using Blackrock as an intermediary, but Tether have always been very opaque about their actual structure. And who are all these people who have swapped cash for a non-cash token which does NOT bear interest, unlike the bonds?

airza• 9 months ago

People give tether their USD so they can bypass currency controls when buying and selling crypto online. There are a lot of them to put it mildly.

hyghjiyhu3• 9 months ago

Can people holding tether for a day or two while entering of exiting crypto really explain these large amounts?

m00dy• 9 months ago

Cantor Fitzgerald

cypherpunks01• 9 months ago

Correct, this is the answer. Wasn't really known until this year.

https://fortune.com/crypto/2024/11/25/commerce-nominee-howar...

jameskilton• 9 months ago

As Matt Levine has said multiple times in "Money Stuff", Tether has found the perfect business plan. They hold billions of actual USD, and get to keep all of the interest for themselves.

glitchc3• 9 months ago

Cash doesn't earn interest. T-bills and money market funds earn minimal interest compared to equities. Given the size of their holdings, Tether is paying a huge opportunity cost for their position. I don't consider that good business.

voidmain0001• 9 months ago

NPR Planet Money has a podcast from last week speaking about hedge funds buying US treasuries. They touch on the chaos that can come from hedge funds buying treasuries and suggest that hedge funds might be lumped into the too big to fail group.

https://www.npr.org/2025/10/10/nx-s1-5565181/trilemma-treasu...

actionfromafar4• 9 months ago

Do they hold it? How would we know?

evdubs7• 9 months ago

Attestation reports. Every quarter, BDO confirms holdings directly with Tether's banking partners.

https://tether.to/en/transparency/?tab=reports

tim3334• 9 months ago

I hold some Tether. It's fairly normal if you speculate on crypto.

alecco• 9 months ago

It's incredible how this comment got a bunch of replies not understanding the question.

Explanation: Tether is not holding a stack of paper bonds in a safe. They must use some broker (or similar) to operate and hold the treasuries for them. And they are hiding how this is working. So the parent's question is who do they (Tether) hold it (treasuries) through (as in what broker/investment bank/whatever).

My answer is nobody outside Tether knows. And they are one of the dodgiest companies out there. We are totally audited, bro, trust me. They could be doing leveraged investments. Or they could just be Madoff 2.0. Nobody really knows. And the US government seems to be looking the other way because they are desperate for any buyers of treasuries.

pjc502• 9 months ago

Exactly. I got this pointed out by one of the old school finance guys I've followed for years on Twitter/bsky; if you're a market participant of that size, other participants should expect to know who you are. If only because someone buying a billion dollars of bonds a week is useful to know if you want to unload some bonds.

USDC by contrast are open in their holdings, through Blackrock.

Large invisible "dark matter" financial holdings are the sort of thing that blow up badly during a financial crisis.

evdubs7• 9 months ago

You're not paying attention, or you are wilfully ignoring the evidence.

Tether banks with Cantor Fitzgerald, a primary dealer with the Federal Reserve. From 2023: https://www.wsj.com/finance/currencies/wall-street-firm-over...

Every quarter, BDO confirms Tether's assets by going to Tether's banking partners directly.

https://tether.to/en/transparency/?tab=reports

wartywhoa23• 9 months ago

This bubble will inevitably burst louder than Krakatoa.

dboreham• 9 months ago

Curious: why? Aren't bubbles about people buying some instrument (stock, bond, bitcoin...) with borrowed real money that is not eventually worth as much as they think it is? People buying stablecoins are exchanging presumably not-borrowed real money for something that amounts to a zero-interest money market fund. Presumably not borrowed because the stablecoin explicitly pays no yield.

throwaway-00015• 9 months ago

Someone just deleted a comment so I’ll put it again here “ Tether is backed by nothing, so it can presumably print without end. If it's suspected they've done this, it could lose its peg. If that happens, it could have consequences.”

There is no reason not to do an audit except when it’s a scam/all money gone. No accounting company wants to do their audit - guess why.

wslh5• 9 months ago

Again, this is not exactly crypto: https://news.ycombinator.com/item?id=45747958

glitchc3• 9 months ago

Why is Tether a bubble?

iso1631• 9 months ago

Isn't it linked to the value of the US Dollar, which itself is linked to the value of the US Economy?

btilly7• 9 months ago

Tether is a bubble because it is an organization run by criminals, that has in the past been convicted of fraud, and is unable to pass a basic financial audit.

The most reasonable explanation is that it is a Ponzi scheme. Which will appear to work right until it doesn't. And if it stops working, the entire crypto universe will implode.

That said, the current President and many who are close to him have significant portions of money invested in crypto. That depend on Tether. There is therefore a reasonable expectation that the US government will covertly back Tether for the next several years if there is any prospect of a collapse.

This expectation is supported by Trump's declaration last March of creating a "strategic crypto reserve" for the USA. See https://www.whitehouse.gov/presidential-actions/2025/03/esta.... On the face of it, this executive order only helps crypto by taking some of it out of circulation. But the provision in 3C of creating "budget neutral" strategies for acquiring more bitcoin, could easily cover converting actual USD to Tether. Particularly if the Tether was available at a discount to the USD.

karel-3d• 9 months ago

Too big to fail...?

kingstnap• 9 months ago

Have people basically loaned these guys a free $135B to let them buy bonds with?

throwaway-00015• 9 months ago

If they bought bonds would be amazing. 99% chances there is not much left. We’ve been saying this for years so not sure when will crash. But definitively it’s a scam

delabay12• 9 months ago

Totally, utterly, completely false. An honest discussion of this matter has no space for tether truthers stuck in the year 2015.

chasebank• 9 months ago

Yes. IIRC they made over $10B in profit last year. Easily the most successful crypto company ever.

btilly7• 9 months ago

Given how conveniently Tethers have appeared in the past to prop up key parts of the crypto ecosystem, many are skeptical that they have actually received as much money as they claim.

FireBeyond3• 9 months ago

Their math has been hilariously unbelievable at times (except to the crypto bros)... at one point they claimed they were banking deposits of about $3B a week.

To put that in perspective, that's what Saudi Aramco or Samsung might get as revenues.

But hey, don't just trust them, trust their bank and it's 33 year old deputy CEO who, when people pointed out that that number didn't match up with international banking numbers, said that was because those people didn't understand the banking licenses being used in The Bahamas, and that there were two, though he couldn't remember their names, or which one they had, or whether they maybe had both.

And when that looked hilariously bad, they removed his info from the bank's website.

And when that looked bad, they added it back.

And when that looked bad, they removed the bank's whole website, and replaced it with a broken WP template with no working links.

Hey, look, several years after that, go to Deltec's website. "Ultra sophisticated private banking" running on a different WordPress site. "Client login"? "This site can’t be reached Check if there is a typo in ebanking.deltecbank.com. DNS_PROBE_FINISHED_NXDOMAIN". Just as has been the case for years.

"Sounds legit to me" say the bros.

delabay12• 9 months ago

This number will continue to climb and I am confident before the decade ends, stablecoins broadly will be the largest holder of US debt. The interests are fully aligned between the issuers and US govt - issuers keep the interest, US has a price insensitive buyer of debt.

This is ultimately good for the world, good for democracy, and good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey, who have suffered their own currency crises to the great detriment of their citizens. With only an Internet connection, US dollar stablecoins give them property rights which can't be voided through an act of the corrupt ruling class.

Before the tether truthers come out, update your priors. This industry is very different than it was in 2015. It has grown up substantially. The GENIUS act is the largest banking and financial reform of the last 100 years, and the consequences will shape the 21st century and local currencies globally.

MangoToupe2• 9 months ago

good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey, who have suffered their own currency crises to the great detriment of their citizens.

Well, except that it ties them to USD, an ultimately doomed currency. The short-term interests are aligned, but they'd be better off with a locally-managed currency and simply banning the USD from being held by either the state or any of its representatives.

delabay12• 9 months ago

"Better off with a locally managed currency" wow, please research the counties I mentioned for five minutes.

It's a luxury opinion to view the USD as trash. It means you have options. USD is the best many people in the world can hope for.

argomo• 9 months ago

What happens to these people if, hypothetically, a malicious U.S. president subverts the Federal Reserve and wildly inflates the dollar?

SoftTalker• 9 months ago

He's tried. He can't.

crazygringo• 9 months ago

The point is that this is massively less likely to happen than with their local currency.

If the dollar starts undergoing wild inflation, then the whole world has a whole lot of problems, not just stablecoins.

actionfromafar4• 9 months ago

Something much, much less unpleasant than what will happen to the rest of us.

optimalsolver• 9 months ago

Was this comment sent from an office in the Cayman Islands, by any chance?

FireBeyond3• 9 months ago

Not a chance.

Tether and their "original" "bank" were in The Bahamas, not the Caymans!

mamonster2• 9 months ago

US has a price insensitive buyer of debt.
This is ultimately good for the world, good for democracy, and good for the downtrodden and underprivileged members of corrupt countries such as Nigeria, Venezuela, Lebanon, and Turkey.

Wow, US has found a gold mine: The super full wallets of Venezuelans, Nigerians and Lebanese! They will buy a trillion of USDT to prop up US debt!

actionfromafar4• 9 months ago

Yes, Trump now says he got 22 trillion dollars from foreigners! It's increasing all the time.

delabay12• 9 months ago

Unironically yes, and their communities will prosper as a result. I see no problem here.

buyucu• 9 months ago

The bigger news here is that China is rapidly winding down its holdings of US debt. This is very bad for America. We'll see American standards of living decline without the Chinese financing American extravagance.

pixl97• 9 months ago

Which will cause great unrest in the US and further allow authoritarian takeover. Fun times.

delabay12• 9 months ago

Stablecoins offer a relentless price insensitive buyer of US debt. This is good for America, good for democracy, and good for property rights globally.

However, stablecoins WILL cause unrest in Nigeria, Venezuela, Lebanon, and Turkey as their corrupt local currency completely erodes and the ruling class can no longer extract from their citizens.

kolanos• 9 months ago

China currently only holds about 2% of U.S. debt. What is the risk exactly?

strictnein• 9 months ago

Japan holds more US debt than China. The UK has also surpassed China.

China had $776.5B a year ago and has $730.7B now, a roughly 5% drop. They don't seem to "rapidly winding down", unless there's some additional data I'm missing.

Look at the other holders. Belgium and Luxembourg combined have more US debt than China.

If the goal was to crash the US economy by selling their small amount of debt (which likely isn't possible for them to do, despite the rhetoric, they have less than 2% of the total debt), they would also significantly impact of all the countries listed here, which would make them very unpopular indeed:

https://ticdata.treasury.gov/resource-center/data-chart-cent...

tock3• 9 months ago

Stablecoins are the greatest business model ever. You hold money as treasuries and earn risk free interest. There is literally no tech spend either. All profit no expenses.

btilly7• 9 months ago

Presumably the figures for Tether's holdings are based on their attestations. Should we believe those figures to be real?

There is no other source for estimates of their financial holdings than those attestations. For years, Tether has promised that they are working on an audit. No audit has emerged. This is suspicious because audits aren't particularly hard for legitimate organizations.

People have gone looking for evidence that Tether really has as much as it has said. Nobody has succeeded. For example https://www.bloomberg.com/news/features/2021-10-07/crypto-my.... Which, after noting Tether's settlement for past fraud, and prominent executives with suspicious criminal histories, famously said that Tether "is quilted out of red flags."

And yet, many strongly believe that Tether is for real. Given that nobody has produced evidence of their wealth, I regard this belief as a question of psychology.

Said psychological belief has a simple explanation. We humans have a strong tendency towards cognitive dissonance. Meaning that we reject evidence which questions our sense of identity.

If I'm a bitcoin millionaire, my likely identity includes, "I'm a millionaire." But the financial system does not allow us to directly trade bitcoin. What I can actually trade bitcoin for is Tether. And therefore my belief in my own wealth relies on trusting that Tether is equivalent to money.

How can I support that trust? I can point to someone smart and say, "They believe in Tether, so it must be real!" I can point to someone rich and say, "They believe in Tether, so it must be real!" I can get angry at anyone who doubts Tether. It is easy to observe all three behaviors from people into Crypto.

That Bloomberg article offers an ironic example. Back in 2021, many crypto enthusiasts pointed at Sam Bankman-Fried. Who was both rich and smart, and publicly believed in Tether. Therefore he was quoted on the topic. Today, of course, he is in federal prison for having run a Ponzi scheme. If we behaved logically, any crypto enthusiast who used to look up to him, should be saying, "Wait, am I sure I'm placing my trust in the right place?" But, predictably, few do that. Instead they dismiss this past mistake, and place their trust today in someone else.

Now everyone knows that crypto is full of Ponzi schemes on top of Ponzi schemes. People are often OK with trying to take advantage of the greater fool, because they don't believe that they will be the greater fool. Others see people apparently making money and get in, driven by FOMO. But statistically, most people in a Ponzi scheme will lose money. And yet they will look like really smart people - right until the scheme collapses.

So here is the real question. Does Tether really have the money? Or does the entire infrastructure of crypto Ponzi schemes rest on yet another Ponzi scheme?

FireBeyond3• 9 months ago

For years, Tether has promised that they are working on an audit. No audit has emerged. This is suspicious because audits aren't particularly hard for legitimate organizations.

Hey, that's not true! They had several audits in progress over time, but had to fire multiple auditors for ... reasons, I guess.

And then they got one completed, but they can't let you see it! Why not? Because uhh, checks notes it's in Mandarin! (I shit you not. Straight out of their own mouths: https://tether.io/news/tether-update/ )

btilly7• 9 months ago

I know.

I'm a little surprised that they expected people to forget that translation services exist. But it fits with how people get sucked into a lot of cults, fraudulent cults, MLMs and the like. (I'm obviously listing nefarious uses. Something similar happens in many relationships.)

First get your target (emotionally or financially) invested. Then put them in a position where they have to accept something uncomfortable (investing emotionally even more), or back out. Repeat and intensify

In extreme cases you try to get them to be swallowing a stream of erratic and blatant lies. At that point you can do anything.

Yes. This says that there is likely a direct connection between Trump's erratic behavior and the fanatical loyalty that he inspires. If you trust him, you have to follow his latest whim. And following his latest whim strengthens your trust. Many charismatic leaders do this.

btilly7• 9 months ago

I wanted to come back to this, and make it explicit how the US program may be running.

If there is a run on Tether, the US government will step in behind the scenes and buy Tether at a discount. This gives Tether a backstop. It also gives the US government an immediate paper profit (buy Tether for less than a dollar, get a dollar of Tether), which can be used to buy Bitcoin. The sight of Tether successfully redeeming currency and Bitcoin going up will trigger a desire to jump back in, and reverse the cash flow. Allowing the US government to withdraw as much money as was actually put in.

This results in a budget neutral investment in Bitcoin. We put $X into Tether, we got out $X. We also got y% of that as Bitcoin. Exactly as the executive order demands that the government should do.

evdubs7• 9 months ago

Ponzi schemes collapse when the participants ask for their money back (redemptions). Tether handled $17B in redemptions in 2022 when their market cap peaked at $83B.

pashabitz• 9 months ago

17th if comparing to sovereign states. There is way more debt held by private domestic investors as well as government agencies.

exasperaited• 9 months ago

If I was on the board of Tether or Capital Union I'd be a little scared by this.

Trump squeezed Intel for 10%, bullied Tiktok into a sale, and is ordering extrajudicial killings not that far away from the Bahamas.

What is to stop him saying: Tether is sketchily governed (seems true), is secretive and unaudited (seems true?), and holds far too much debt for the USA to be secure (could well be true) — "this is against our national security interests"?

$135bn that Congress can't touch must be really tempting. What stops him just taking it?

Especially since his sense of "national security interests" includes Canada making fun of the USA with clips of Reagan.

(I'm not sure that it would even be the wrong thing to do in a more structured, legal way at least)

somanyphotons• 9 months ago

What are the failure modes here? Is the tether company itself a vulnerability?

d--b• 9 months ago

reminding everyone that using Tether is being exposed to US credit risk without remuneration. This should be illegal as they are screwing people over who don’t know shit about how these things work.

mortgages arr regulated, this should be as well.

Tether is now the 17th largest holder of US debt

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