In Tether's beautiful new world of digital petrodollars and retrollars

Damn the US deposit guarantee. Tether now wants to argue that his stable coin ensures the stability of the US financial system.

In a blog post dated September 6th-one who certainly has nothing to do with playing chicken with the US Ministry of Finance-Tether claims that his stable coin is a digital analogue to petrodollar. From Tether's contribution:

tether is an important and powerful instrument for the United States to maintain the role of the dollar as the most stable, most frequently used and most sought -after currency in the world. In the 1970s, the United States secured the future of the US dollar via the petrodollar system, in which oil-producing countries only sold their oil in dollars. Large countries of creditor who had no access to sufficient energy reserves (Japan, Europe, etc.) had to purchase dollars to buy oil. This increased the demand for the US dollar during a monetary change and kept both the dollar and the United States in a position of strength. Trade surpluses were then recycled in US state bonds.

ok. Usdt is therefore a token that is created by buying a wealth value that is created at dollar and transmitted by energy consumption. Petrodollars are dollars that are transferred to an exporter from the sale of potential energy. Do we imagine that crypto is the oil so that this comparison works? Or is the dollar the oil? And if the dollar is the oil, what are the government bonds?

One thing that Tether has with oil exporters is that it has a currency supply somewhere that is recycled in many markets. But before we respond to the popular question of what exactly Tether has, we should offer a little more background, why the company wants to be considered systemically relevant to the stability of the world leading currency.

Last month Tether said that it would not freeze to Usdt, which is connected to Tornado Cash, even after the crypto washing salon was put on a sanction list by the US Office of Foreign Assets Control (OFAC). It is said that it is due to a) tether is not based in the USA and does not accept US citizens as customers; b) The law enforcement did not ask Tether directly; And c) The company based in the USA has not frozen comparable transactions for Busd, its stable coin, which is issued in partnership with Binance. (Paxos later

updated his contribution to explain that he would freeze money in his freezing wallet if they were sent to or from a sanctioned address.)

The dollar replacement of choice for the activation of ponzi systems and ransomware does not prove that Tether underpins the entire US financial system. Perhaps the reason why the company emphasizes that it has also been a volume buyer of treasure changes for four months:

. . . In May, stable coins made up more than 2 % of the total treasuries market, which exceeded the amount owned by Berkshire Hathaway. Even today, Tether is an important buyer on the US trasuries market.

We are not sure why Berkshire is a valid comparison, apart from the fact that it is big and known, but maybe Tether just liked to get into the company of Warren Buffett. In addition, 2 percent of the treasury market would mean that stable coins currently hold a total of $ 466 billion in US state debts. . . . shit is unlikely. (FWIW, when we look at Coinmarketcap, we can see that the overall market value of stable coins is currently $ 153 billion, and we ask ourselves how much of it is actually covered by Usts).

But fair enough. America has many reasons to pay attention to an unregulated quasi-prime money market fund manager with a shadow bench worth $ 68 billion-although market influence is not the main concern.

On June 30th, Tether said that it had $ 29 billion in treasury stocks. For comparison: According to the Office of Financial Research, HSBC managed around $ 63 billion in US money market funds in July. That is around 1.2 percent of the total assets of regulated US money market fund. Fidelity, the largest provider of money market funds, manages almost 18 percent of the market assets. Even Berkshire Hathaway exceeds Tether with $ 75 billion in short-term investments in treasure change on June 30, which is why the statistics cited above relate to the entire StableCoin universe.

The post concludes:

. . . Usdt offers the United States a similar instrument that offered the petrodollar regime for the digital age. Many advantages that the United States have drawn from the petrodollar system and the role of US state bonds as a global reserve system can be replicated with USDT and other stable coins.

The invention of Tether, a digital dollar, is a monetary policy instrument for the digital age. One of which we hope that the United States will promote them.

All of this is a fascinating context for the owner of dollar replacement currencies from the analogue era, such as the Dirham of the United Arab Emirates, the Aruba florin and the East Timor Centavo, which have rarely been recognized as important instruments of FOMC policy. And since the supremacy of the petrodollar disappears, Tether's history speech may help to open some heads in Washington. To them, Ofac.