Kiffmeister’s #Fintech Daily Digest (20230922)*

Tether resumes USDT loans, insists it maintains excess reserves

Tether has resumed USDT lending to clients, nearly a year after the company had announced that it would discontinue offering collateralized loans in 2023. As of June 30, 2023, the latest quarterly attestation showed assets that included $5.5 billion in loans, up from $5.3 billion in the previous quarter. A Tether spokesperson said the company’s aim is to prevent any significant depletion of its customers’ liquidity or the need for them to sell their collateral at potentially unfavorable prices, which could result in fire sale losses. [Read more at Decrypt and Bloomberg]

Tokenization: Overview and financial stability implications

The U.S. Federal Reserve published a paper that discusses the potential benefits and financial stability implications of tokenization. Among the benefits of tokenization, are lowering barriers to entry into otherwise inaccessible markets and improving the liquidity of such markets. However, it concludes that tokenization creates interconnections between the digital asset ecosystem and the traditional financial system. At sufficient scale, tokenized assets could transmit volatility from crypto-asset markets to the markets for the tokens’ reference assets. [Read more at the the Fed]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments:

Kiffmeister’s central bank digital currency monthly monitor

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