[lamontcg]

They're probably exchanging Tether for loans that their counterparties write against crypto collateral and calling that "commercial paper".

Anything else is ridiculous because people would notice it. If it is all self-contained withing crypto then it makes vastly more sense.

Once you think of a cold wallet full of bitcoin as having value like real estate[*] then it makes sense to take out tether loans against that collateral.

They need to make up something though to sound responsible so they call it "commercial paper" and for some reason nobody questions if they might be grossly twisting the meaning of those two words.

[*] Which I don't, but everyone involved in crypto certainly does.

[vmception]

Honestly, if anybody ever bothered to assume that Tether worked the way it was advertised most of the time - just like both the NYAG and CFTC found most of the time for most Tethers - it would actually all make sense.

Why would better managed and more transparent competitors like USDC, GUSD, and PAXOS all be rising in circulation at the exact same trajectory as Tether, if Tether was just doing funny money accounting or having completely uncollateralized Tethers compared to just the same distribution of regional crypto enthusiasm in the same kinds of transactions. What if, yeah I know, what if people actually just deposit fiat and rarely redeem for fiat because they treat stablecoins as basically their savings and investing account. The craaaziest idea, I know, but the behavior is being mimicked across all fiat-backed stablecoins which suggests that its harder to assume the worst about Tether simply because its never transparent enough and yeah, it won't be. My only point is to think "hm maybe people actually use it and like it and that's the vast majority of the creation of more tethers just like two US regulators found."

[lamontcg]

Because nobody is going to be dumping $70B of actual USD into Tether while BTC is running up massively in value.

That would effectively be $70B parked under a mattress.

[vmception]

Tethers are only destroyed when they are redeemed. When people create Tether and trade them, they still exist with whoever is the recipient.

The same with other bank account stablecoins.

Much of that Tether is stored within liquidity pools and other onchain financial services, the same with other bank account stablecoins. So thats not a great assumption to bolster the ongoing transparency issues with Tether.