Tether resumes lending after promise to reduce it to zero
Tether Holdings has resumed lending services in its stablecoin less than a year after promising to “ reduce lending to zero.” According to the Wall Street Journal, the company was supposed to reduce the issuance of loans to zero in 2023. They were assumed to be canceled completely in 2024. 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. However, in the second quarter, Tether received several requests for this service. “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.” Alex Welch, Tether Holdings spokeswoman Asset liquidity problems 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 $...