Tether Backtracks On Earlier Promises
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September 21, 2023 12:30 pm
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Tether, the issuer of the USDT stablecoin, has backtracked on earlier promises to curtail its lending practices.
According to a press release from the company, Tether is attempting to better serve customer needs by issuing unsecured loans through their USDT stablecoin, or at least this is what the company claims.
This follows after the company announced that it would be ending its controversial lending services less than one year ago.
Community reactions to Tether’s recent announcement were overwhelmingly negative, with some pointing to the collapse of LUNA as a warning to Tether.
Wall Street Journal reporter Jonathan Weil broke the story: “Tether Holdings resumed lending its stablecoins to customers, less than a year after it said it would wind down the practice and reduce loans to zero in 2023.”
Tether Holdings resumed lending its stablecoins to customers, less than a year after it said it would wind down the practice and reduce loans to zero in 2023. | My latest @WSJ
— Jonathan Weil (@JonathanWeil) September 21, 2023
One user called out the stablecoin issuer: “Tether printing tethers out of thin air and calling them loans. Give tether shitcoins you print out of thin air as collateral. It worked great for Luna. When you can’t dump your shitcoins without crashing the market you can count on Tether bailout.”
Tether printing tethers out of thin air and calling them loans.
Give tether shitcoins you print out of thin air as collateral.
It worked great for Luna. When you can’t dump your shitcoins without crashing the market you can count on Tether bailout.https://t.co/LpulNoxyVP
— Bitfinex'ed 🔥🐧 Κασσάνδρα 🏺 (@Bitfinexed) September 21, 2023
Daily Coin had more on the story:
This renewed lending activity marks a shift from Tether Holdings’ previous stance in December 2022, when they announced their intention to phase out secured loans entirely by 2023.
According to Alex Welch, a spokeswoman for Tether Holdings, this change in direction was prompted by short-term loan requests from long-standing clients in the second quarter of 2023.
Novacula Occami provided an excerpt from Tether’s accompanying PR release: “Traditional financial institutions are NOT addressing the needs of their customers in a way THAT IS DETRIMENTAL to a thriving economy and few have taken the time to examine this further.”
Tether’s PR hacks at it:
“Traditional financial institutions are NOT addressing the needs of their customers in a way THAT IS DETRIMENTAL to a thriving economy and few have taken the time to examine this further”
So banks aren’t detrimental to customers…..that’s good, right? pic.twitter.com/za8Djlj3dJ
— Novacula Occami (@OccamiCrypto) September 21, 2023
Davos Protocol provided a different perspective: “Tether’s move to resume lending is noteworthy. At Davos Protocol, we’ve always emphasized the importance of fair borrowing rates and user protection. It’s crucial for the DeFi space to prioritize user interests.”
Tether's move to resume lending is noteworthy.
At Davos Protocol, we've always emphasized the importance of fair borrowing rates and user protection.
It's crucial for the DeFi space to prioritize user interests. 💪
— Davos Protocol (@Davos_Protocol) September 21, 2023
Crypto News broke down potential liquidity problems Tether faces:
At the end of September 2022, Tether had a negligible capital buffer of $250 million (0.4% of assets). At that time, the volume of loans was $6.1 billion, or 9% of the firm’s total assets.
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