Tether Resumes Stablecoin Lending Activities Amid Growing Demand
Tether Holdings has made a surprising decision to resume its stablecoin lending activities after initially planning to scale down. The company has started lending its own stablecoin, USDT, to clients again due to a surge in short-term loan requests from long-term valued customers during Q2 2023.
Revival of Stablecoin Lending
The Wall Street Journal reported that Tether spokesperson Alex Welsh confirmed the issuance of new loans. Welsh stated that these loans are expected to be discontinued by 2024. She emphasized that these loans have helped customers avoid defaulting on their obligations and increased liquidity.
In its latest quarterly report, Tether revealed that the total value of its loans reached $5.5 billion as of June 30, a slight increase from the previous quarter. Stablecoin loans have gained popularity as a lending option from Tether, allowing clients to secure USDT loans with collateral. However, concerns remain about Tether’s lack of transparency regarding these collateral-backed loans.
Tether’s Response
In response to the WSJ report, Tether defended its decision to resume stablecoin lending activities and highlighted its commitment to security and stability. The company argued that traditional financial institutions are failing to meet customer needs and negatively impacting the economy.
Tether also revealed that it has accumulated over $3.3 billion in excess reserves and is projected to make a yearly profit of $4 billion. It stated that this level of profitability and excess reserves offset the secured loans and contribute to the company’s balance sheet.
“The banking industry is facing significant challenges and has proven incapable of keeping up with evolving global financial markets, something the Wall Street Journal has disregarded countless times in pursuit of tarnishing the reputation of true innovators like Tether.”
Tether has also become one of the world’s largest buyers of US Treasury bills, with holdings totaling $72.5 billion. This places Tether in the 22nd position globally, surpassing countries such as the United Arab Emirates, Mexico, Australia, and Spain in terms of Treasury holdings.
Hot Take: Tether Resumes Stablecoin Lending Amid Controversy
Tether Holdings has decided to resume its stablecoin lending activities despite facing ongoing scrutiny and doubts about its transparency. The company cites strong customer demand and dissatisfaction with traditional financial institutions as reasons for its decision. While Tether defends its actions and emphasizes its commitment to security and stability, concerns remain about the lack of transparency surrounding collateral-backed loans. Tether’s significant holdings in US Treasury bills further add to the complexity of its operations. As the stablecoin lending market continues to evolve, it remains to be seen how Tether will navigate regulatory challenges and maintain trust among its users.
By
By
By
By
By