The Wall Street Journal reports that Tether has once again lent its stablecoins to customers, despite the company's previous announcement less than a year ago that it would gradually reduce this practice.
In Tether's latest quarterly financial report, they stated that as of June 30th, their reserve assets included $5.5 billion in loans, an increase from the previous quarter's $5.3 billion. Tether spokesperson Alex Welch confirmed that the company has issued new loans.
Welch stated, “Tether received short-term loan requests from several long-term customer relationships in the second quarter of 2023, and we decided to fulfill these requests. The loans will be canceled in 2024. The company's goal is to prevent customers from experiencing a significant liquidity drain or selling collateral at potentially unfavorable prices to avoid losses” (WSJ).
In December of last year, Tether had announced its plan to reduce collateral loans in its reserve to zero by 2023.
Tether has issued an official response to the Wall Street Journal's report regarding its lending of stablecoins. The article states that the banking industry is facing significant challenges and has been proven incapable of keeping up with the constantly changing global financial markets—a fact repeatedly overlooked by The Wall Street Journal in its attempts to tarnish the reputation of true innovators like Tether.
Traditional financial institutions have failed to introspect and have instead kept a close watch on Tether. To safeguard customer interests, Tether has accumulated over $3.3 billion in excess reserve funds to effectively mitigate the risk exposure associated with secured loans.
Anyone with even a basic understanding of financial markets knows how a company with $3.3 billion in excess reserves and the potential to generate $4 billion in annual profit can offset collateralized loans and keep those profits on its balance sheet. Tether remains committed to removing collateral loans from its reserves.
Individuals who are misinformed should delve deeper into the functions of stablecoins and dispel any misconceptions about Tether's security. Alternatively, one might wonder if this is merely an attempt to manipulate tabloid-style reporting to placate those deeply entrenched in the conservative “friendly camp.”
Earlier today, WSJ reported that Tether has once again lent its stablecoins to customers, despite the company's announcement less than a year ago that it would gradually reduce this practice. In Tether's latest quarterly financial report, as of June 30th, they stated that their reserve assets included $5.5 billion in loans, an increase from the previous quarter's $5.3 billion. Tether spokesperson Alex Welch confirmed that the company has issued new loans.