[znebby]

In the recent thread about this topic [1] people mentioned that USDC is also not fully backed by pure cash.

Assuming USDC has no funny business like tether seems to, how is this any different than companies like PayPal, which presumably also don't just have a bank account sitting with billions of dollars cash, backing all of their virtual cash?

1. https://news.ycombinator.com/item?id=27151370

[thirtyseven]

I mean, PayPal is not a bank, and if for some reason they become insolvent, your deposits will be gone too.

That being said, I don't keep large deposits in PayPal, and I've never had trouble getting PayPal money directly deposited into my bank account via ACH. Can the same be said for USDT?

[danlugo92]

Paypal doesn't print I pressume? Only receives fiat deposits.

[gruez]

But there doesn't seem to be much evidence that tether is printing USDT, only a history of them losing people's deposits due to random banking related issues.

[onlyrealcuzzo]

The evidence is that - by their own numbers - they would've needed to buy 1% of all commercial paper in existence in a one month period.

It just didn't happen.

I will add that the problem is roughly 2x worse. Tether is only ~60% of the stablecoin market: https://coinmarketcap.com/view/stablecoin/

[davidgerard]

Tether are printing USDT, then accounting for the printed USDT on the books as "loans".

This is what banks do, but Tether is not a bank.