Tether confirms resuming lending its stablecoins to clients, less than a year after committing to end such loans; $5.5B of its assets were loans as of June 30
Cryptocurrency issuer had said it would cut loans to zero in 2023 — Tether Holdings resumed lending out its own stablecoins to customers …
Wall Street JournalJonathan Weil
Context & Ripple Effects
Tether had said it would wind down loans denominated in USDT during 2023 after its disclosures showed such lending had reached $6.1 billion in late 2022. The renewed activity reverses that stated direction rather than merely completing a gradual reduction.
The move also follows Tether's reported shift from commercial paper to US Treasury bill holdings, making the composition and liquidity of its remaining non-Treasury assets a more salient part of how users assess USDT.
First-order effects
Tether again has customer credit exposure tied to its own stablecoin, with loans accounting for $5.5 billion of assets as of June 30.
Customers seeking USDT liquidity regain access to issuer-provided borrowing, while Tether departs from its prior commitment to eliminate that channel.
Other stablecoin issuers and major USDT users face a sharper comparison between a reserve portfolio held in highly liquid assets and one that also includes issuer-originated credit.
Third-order effects
If issuers increasingly use reserve balance sheets to extend credit, stablecoins will be assessed less like simple cash-backed tokens and more like financial intermediaries whose liquidity depends on asset quality and loan performance.
The episode reinforces that public reserve claims alone may not settle confidence questions; the treatment of related lending can become a lasting differentiator among stablecoin models.
The trend: Stablecoin competition is increasingly turning on the liquidity, transparency, and risk profile of the assets behind each token, not just the token's peg.
Challenges Plague Banking Industry as Tether Demonstrates Strength and Commitment to High Quality Principles Amidst Scrutiny from WSJ Read more: https://tether.to/...
tether didn't announce the continuation of their loan program, and only confirmed it when explicitly asked muh, transparency (tether's q2 attestation was released on 31st July — seems like the WSJ was the only one noticing the increase in loans.) [image]
Normally, there's no way to internally expand the money supply in crypto because there's no central bank, and stablecoins are only issued against inflows of fiat dollars. Tether “loans,” however, are stablecoin issuance against other collateral — historically, other crypto.
WSJ: Tether resumes lending its own stablecoin to customers after a pause of less than a year. Tether received several short-term loan requests from customers with long-term relationships in the Q2 2023. Tether's goal is to prevent customers from being depleted of liquidity or...
The Tether spokesperson said its aim with the loans “is to prevent any significant depletion of our customers' liquidity or the need for them to sell their collateral at potentially unfavorable prices, which could result in losses.” AKA - it's crypto's discount window.
Tether printing tethers out of thin air and calling them loans. Give tether shitcoins you print out of thin air as collateral. It worked great for Luna. When you can't dump your shitcoins without crashing the market you can count on Tether bailout. https://www.wsj.com/...
Tether Holdings resumed lending its stablecoins to customers, less than a year after it said it would wind down the practice and reduce loans to zero in 2023. | My latest @WSJ https://www.wsj.com/...