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Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Crypto

*Recent Disclosures Are Worrisome: The additional disclosures of the stablecoins this past week continue to increase the worries over liquidity, and the systemic risks that they present. Liquidity still remains limited at Tether with potential redemption requests in a tail risk event. However, first time disclosure provided by Circle Internet Financial (Coinbase's partner in offering USD Coin) suggested that reserves were not fully backed by USD; and*Tether Flows: Given the mainland Chinese crackdown, it would appear that investors don't understand Tether’s systemic risks; and/or mainland Chinese-based investors are aggressively moving funds out of the country via this channel prior to it being shut down completely. If  authorities decide the shut the Tether channel over its use for moving large amounts of capital out of mainland China, cryptocurrency market liquidity would essentially dry up as Tether accounts for over 60% of global cryptocurrency daily trading volumes.

*Recent Disclosures Are Worrisome: The additional disclosures of the stablecoins this past week continue to increase the worries over liquidity, and the systemic risks that they present. Liquidity still remains limited at Tether with potential redemption requests in a tail risk event. However, first time disclosure provided by Circle Internet Financial (Coinbase's partner in offering USD Coin) suggested that reserves were not fully backed by USD; and*Tether Flows: Given the mainland Chinese crackdown, it would appear that investors don't understand Tether’s systemic risks; and/or mainland Chinese-based investors are aggressively moving funds out of the country via this channel prior to it being shut down completely. If  authorities decide the shut the Tether channel over its use for moving large amounts of capital out of mainland China, cryptocurrency market liquidity would essentially dry up as Tether accounts for over 60% of global cryptocurrency daily trading volumes. 

Stablecoins - Tether and Coinbase Highlight Liquidity Risks