A giant unregulated currency is undermining America’s fight against arms dealers, sanctions busters and scammers. Almost as much money flowed through its network last year as through Visa cards. And it has recently minted more profit than BlackRock, with a tiny fraction of the workforce.
Its name: tether. The cryptocurrency has grown into an important cog in the global financial system, with as much as $190 billion changing hands daily.
In essence, tether is a digital U.S. dollar—though one privately controlled in the British Virgin Islands by a secretive crew of owners, with its activities largely hidden from governments…
Tether has $120 billion in assets, mostly risk-free U.S. Treasury bills, along with positions in bitcoin and gold. Last year it generated $6.2 billion in profit, outearning BlackRock, the world’s largest asset manager, by $700 million… Tether’s CEO claims over 300 million people are using the currency…[end quote]
It’s the scale of Tether’s operation that makes it of Macroeconomic significance. The article describes how tether enables legal transactions in countries that are under U.S. financial sanctions for political reasons, such as Venezuela and Russia, in addition to illegal operators.
Long long ago, back in the 1980’s, the USAian Christian nutjobs powerfully positioned in the Reagan administration hated and attempted to destroy my gay rights publishing company, Liberation Publications, Inc., by using under the table pressure on USAian credit card issuers to cut off the critical flow of subscription money we depended upon.
EMERGENCY!
My main distributor of my prime title, the Advocate Newsmagazine, to newstands throughout the Northeastern USA was actually controlled by a prominent gangster family. I got on the phone with “Bobby” and explained my situation. “Bad for you is bad for me!” he exclaimed, and he quickly set me up with a Virgin Island bank that happily processed my accounts for a very small extra consideration.
Sigh.
Very little changes. Sometimes that is good, and sometimes it is bad.
I find that number even harder to believe. $190 billion in a day translates to $69 trillion in a year. That’s more than double the US annual GDP, and almost 70% of the world wide GDP.
Granted, they did say as much as $190 billion in a day. That would have to be one heck of a day. Tether has only $120 billion of coin in circulation. They’d have to turn over their entire circulation more than once in a day to get to that volume.
Tether has never been audited and there are no regulators checking in. If you hold Tether, it is prudent to assume there is a chance it will become unredeemable.
One thing the article hinted at but didn’t come out and say is that a huge percentage of crypto volume is simply wash trades where crypto is exchanged between many wallets to make the source essentially untraceable.
I think I read something about that a while back, some service called tornado that moves it repeatedly in small chunks all over the place and slowly into the final destination to make it impossible, or at least extremely difficult, to trace.
Now I remember another part of what I read about it!!! It brought up the question of how can it be illegal to use a piece of software that nobody owns and nobody profits from. Apparently it was made open source so anyone could theoretically run it. Maybe we even discussed it here a few years back.
I am not a securities or banking lawyer, but my take is that the US Treasury determined that the software was being used for extensive money laundering, and therefore was illegal to use or possess in the U.S. or by U.S. citizens or companies.
Just because it is “open source,” or not owned by anybody, wouldn’t seem to affect that.
No surprise that tracking the legality and “legitimacy” of money is becoming a huge concern of governance, replacing concerns about straight up counterfitting. I live in Mexico, and banking is made nightmarish for most by all the regulations to control the movement of illegal fruits of illegal activities.
I expect money will go digital eventually, printing serial numbers on all large bills or one time transfers.
Every now and then I’d look at the advocate but I don’t do dating classifieds or loud music concerts.
In the Hartford area you were part of putting John Rowland in prison the first time. But I think the Manchester Gazette did the heavy lifting. I knew Paul the whistleblower.
