Tether Holdings, a prominent player in the stablecoin industry, has recently resumed lending its USDT stablecoins despite initial pledges to suspend such activities. This decision has sparked concerns within the cryptocurrency community due to the potential risks associated with Tether’s dominant position in the market for stablecoins.
Tether Responds to Lending Questions and Reveals Plans
Tether Holdings spokesperson Alex Welch has confirmed that they received short-term loan requests from long-time clients in the second quarter of 2023.
Understanding their need to avoid selling assets at bad times, Tether decided to approve these loan applications to assist and support their valued customers.
Welch stated that Tether aims to cease these loan-giving practices entirely by 2024. The primary objective is to safeguard customers’ ability to access their funds easily without compelling them to sell assets at undervalued prices, which could result in financial setbacks.
Back in September 2022, Tether Holdings didn’t have much extra money on hand, just about $250 million, a tiny portion (0.4%) of everything they own. At that time, they had given out loans worth $6.1 billion, about 9% of everything they owned. This made some people nervous, causing the value of tether tokens to drop below $1.
Since then, Tether Holdings has worked hard to strengthen its financial position. They have allocated approximately $3.3 billion, accounting for 3.8% of their total assets.
While they assert that their loans are secured by assets of greater value than required, specific details regarding these assets and whether cryptocurrencies are included remain undisclosed.
Tether’s Loan Amounts Grow
In their most recent financial report, Tether has disclosed that they have lent out $5.5 billion, surpassing their previous lending amount of $5.35 billion. This development comes as a surprise considering Tether’s earlier commitment to cease providing loans and enhance transparency regarding their monetary operations.
Some people have even decided to use different stablecoins instead because they’re unsure if they can trust Tether.
