Tether commits to reduce secured loans to zero

Tether has pledged to stop the practice of lending out funds from the reserves that back its USDT stablecoin. The move is likely in response to a Wall Street Journal report earlier this month alleging these loans were risky, claiming that the “company may not have enough liquid assets to pay redemptions in a crisis,” even though Tether claims that the loans are over-collateralized and covered by “extremely liquid assets.” Tether said that starting from now, throughout 2023, it will reduce secured loans in its reserves to zero. [Read more at Coin Telegraph]

Lessons from the crypto winter: DeFi versus CeFi

The OECD published a paper that assesses the role of centralised finance (CeFi) and decentralised finance (DeFi), and the disproportionate impact the crypto market turmoil has had on retail market participants. It examines learnings of the recent crypto-asset market downturn, including high interconnectedness within the crypto-asset ecosystem; elaborate mechanisms of financial engineering that heavily use leverage and are built on the composability offered by DeFi (i.e., components of DeFi are pieced together to create new products); and increased market concentration. The paper also highlights the urgency for policy action and provides policy recommendations. [Read more at the OECD]

Institutional Demand for Cryptocurrencies Global Survey 2022

Coin Telegraph published a paper on the institutional demand for crypto-assets, based on a survey of more than 6,000 registered professional investors from 11 countries. [Download the report at Coin Telegraph] Jonas Gross provided some highlights on LinkedIn:

• 62% of the professional investors surveyed currently hold digital assets (43%) or plan to buy them in the future (19%).
• 3.3% of the respondents’ total assets ($316 billion) is invested into crypto-assets ($10.43 billion).
• Institutional investors including public corporations and governments own 1.39 million Bitcoin equal to 7.2% of the circulating supply.
• Professional investors are primarily holding Bitcoin (94%) and Ether (75%).

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

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