I agree with you that Tether is very risky, but I think your revaluation of the "digital coins" class. In its attestations, Tether claims to value digital coins as "cost less impairment," so effectively at the minimum value the coin has reached since its purchase.
With that methodology, it is erroneous to apply "down 60% from market highs" to estimate the current value.
That said, we can speculate endlessly about Tether's ultimate solvency because we don't have a detailed enough balance sheet. I think it's clear, however, that despite acting like a bank Tether's capital could not possibly meet Basel 2-like risk weighting standards. Even with completely above-board operation, Tether would be reasonably likely to collapse if we experienced a repeat of the 2008 financial crisis.
I agree with you that Tether is very risky, but I think your revaluation of the "digital coins" class. In its attestations, Tether claims to value digital coins as "cost less impairment," so effectively at the minimum value the coin has reached since its purchase.
With that methodology, it is erroneous to apply "down 60% from market highs" to estimate the current value.
That said, we can speculate endlessly about Tether's ultimate solvency because we don't have a detailed enough balance sheet. I think it's clear, however, that despite acting like a bank Tether's capital could not possibly meet Basel 2-like risk weighting standards. Even with completely above-board operation, Tether would be reasonably likely to collapse if we experienced a repeat of the 2008 financial crisis.