Benzinga - After a year of pause on advancing Tether (CRYPTO: USDT) stablecoin loans to customers, Tether Group has initiated lending again after receiving multiple short-term loan inquiries in Q2 2023, according to The Wall Street Journal.
The company believes that this will protect its long-term customers from liquidity shortages or selling assets at inappropriate rates, WSJ reports.
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Earlier, the company’s secured loans were a matter of concern in the crypto space due to its potential risks of destabilizing the market due to its stablecoins dominance. Tether was required to cut down its loans as it concealed details on reserves in risky financial instruments such as Chinese securities. Although the USDT market cap scaled up to $83 billion, investors’ confidence seems shaken and many have opted for other stablecoins.
In the latest reported quarter, Tether saw loans at $5.5 billion compared to $5.35 billion in the prior quarter. In its financial statement, Tether announced that it is still committed to removing the secured loans from its reserves, according to WSJ.
Although the company has not provided any details of the timeline, a Tether spokesperson indicates 2024 to be the year of zero secured loans. The spokesperson added that the incomplete financials do not reflect the company’s complete financial health, the Journal reports
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WSJ Report On Tether
In December 2022, a WSJ report had raised concerns about Tether’s products, reporting that the loans were not fully collateralized. The publication also questioned Tether’s ability to meet redemption requirements in difficult times. Tether addressed the concerns back then and assured of eliminating stablecoin loans in 2023.
In a response to Thursday's WSJ article which states that Tether had earlier indicated cutting down loans to zero in 2023 but is seeing a rise currently, Tether stated: “Anyone with a minimum understanding of financial markets would see how a company having $3.3 billion in excess equity and on track to make a yearly profit of $4 billion is in all effects offsetting the secured loans and retaining such profits within the company balance sheet.”
Tether also highlighted that WSJ’s concerns around stablecoins are uncalled-for, and it still remains committed to removing secured loans from its reserves.
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