[earnesti]

Banks have like 10% or even less the dollars that they are supposed to be holding, but still are doing all fine.

Personally I don't think these tether conspiracy theories were ever true. Maybe they aren't 1:1 backed, but they have always been financially well off enough to keep the company running. And after the interest rates went up, they are probably making a killing. Typical bank has minimal reserves compared to them, and everyone is fine with that.

[whamlastxmas]

Banks have extreme requirements on that ratio though, and have been regulated to death (for good reason) for a hundred years

[sgammon]

> Banks have like 10% or even less…

That’s completely untrue, and Tether isn’t a bank.

[Spivak]

Yeah, banks hold much less than 10%, as of 2020 the reserve requirement is 0%.

[tfehring]

Reserve requirements are completely different from capital requirements. US banks are required to hold about $108 in assets for every $100 they hold in deposits, and their actual holdings are typically in the range of around $110 to $115 in assets per $100 of deposits. Central bank reserves are one type of asset that commercial banks can hold; a 0% reserve requirement just means that commercial banks can hold all of that ~$108 in other assets if they choose to.

In contrast, Tether has historically admitted to having as little as $100.20 in assets per $100 in liabilities [0], with a significant fraction of it in crypto and other assets that effectively wouldn't even count toward banks' capital requirements. It has probably dropped below $100 in assets per $100 in liabilities - i.e., been insolvent - at some point, and even taking its latest audit [1] at face value, it has far less capital than would be needed for a bank with the same asset profile in the US or other developed countries.

[0] https://assets.ctfassets.net/vyse88cgwfbl/1np5dpcwuHrWJ4AgUg...

[1] https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYg...