[skybrian]

When you buy something using money in your bank account, your bank needs to pay their bank during settlement. Your bank has lower assets (and matching liabilities.) Their bank has more.

This is presumably true for stablecoin deposits too. But what banks are they using? What assets end up changing hands?

[Grustaf]

It's theoretically true, but Tether at least don't seem to be doing that. They don't even claim to be backed by more than a few percent of cash, and they have never been audited. Imagine a multidecacorn startup that never had submitted to an audit.

[skybrian]

They traded Tether for other kinds of money, and the money went... somewhere.