<div class="cryptonews"> 
 <p class="is-style-lead">Tether Holdings has resumed <a rel="noopener noreferrer nofollow" title="lending" href="https://thebittimes.com/tag/lending.html">lending</a> services in its stablecoin less than a year after promising to “<a rel="noopener noreferrer nofollow" title="reduce" href="https://thebittimes.com/tag/reduce.html">reduce</a> <a rel="noopener noreferrer nofollow" title="lending" href="https://thebittimes.com/tag/lending.html">lending</a> to zero.”</p> 
 <p>According to the Wall Street Journal, the company was supposed to <a rel="noopener noreferrer nofollow" title="reduce" href="https://thebittimes.com/tag/reduce.html">reduce</a> the issuance of loans to zero in 2023. They were assumed to be canceled completely in 2024.</p> 
 <p>This decision aimed to prevent any significant depletion of Tether clients’ liquidity or the need to sell their collateral to them at potentially unfavorable prices, which could lead to losses.</p> 
 <p> However, in the second quarter, Tether received several requests for this service.</p> 
 <blockquote class="wp-block-quote"> 
  <p>“During the second quarter of 2023, we received a few short-term loan requests from clients with whom we have cultivated longstanding relationships, and we made the decision to accommodate these requests.”</p> <cite>Alex Welch, Tether Holdings spokeswoman</cite> 
 </blockquote> 
 <h2 class="wp-block-heading" id="asset-liquidity-problems">Asset liquidity problems</h2> 
 <p>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. </p> 
 <p>With USDT’s depeg in 2022, investors have questioned whether the company will have enough liquid assets to meet redemptions in the event of a crisis. The firm claims its loans are “over-collateralized by liquid assets” but declines to say what assets are collateralized.</p> 
 <div class="cn-block-related-link"> 
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  </svg> <span class="cn-block-related-link__prefix"> You might also like: </span> Tether becomes one of US Treasury bills’ major holders 
 </div> 
 <h2 class="wp-block-heading" id="tether-loans-become-a-risk">Tether loans become a risk</h2> 
 <p>Experts note that the resumption of <a rel="noopener noreferrer nofollow" title="lending" href="https://thebittimes.com/tag/lending.html">lending</a> is a potential risk for the cryptocurrency industry. Thus, Tether Holdings cannot be sure that the loans will be repaid, that it will be able to sell the loans to a buyer for dollars in a pinch, or that the collateral it holds will be sufficient.</p> 
 <p>It also remains unclear why the company’s clients may have sold their collateral at unfavorable prices or whether Tether Holdings made new loans this year to help clients avoid defaulting on existing loans.</p> 
 <p>The firm does not provide audited financial statements or a complete balance sheet to complicate matters. As a result, third parties cannot fully understand the company’s financial condition.</p> 
 <div class="cn-block-related-link"> 
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  </svg> <span class="cn-block-related-link__prefix"> You might also like: </span> Tether market cap slips as stablecoin ecosystem shifts 
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<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/tether-resumes-lending-after-promise-to-reduce-it-to-zero-tbt63514.html">https://thebittimes.com/tether-resumes-lending-after-promise-to-reduce-it-to-zero-tbt63514.html</a></p>

Tether resumes lending after promise to reduce it to zero

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