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A Summary of

Money Stuff: Looking for Tether’s Money

Matt Levine
Money Stuff
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  • It was revealed that Tether, a "traditional" stablecoin, had lent billions of dollars to other crypto companies, with BTC as collateral, and one of them is Celsius Network. Tether says these loans are low-risk because borrowers have to put up BTC worth more than what they borrow.
  • Why this is important:
    • Some people in crypto want volatile assets because they are gamblers. Others want no risk, which can be achieved through stablecoins.
    • There is another way to get stable crypto, which is typically the "main move" in normal finance (which is basically what Tether is doing):
      • Get a bunch of BTCs and slice them into junior and senior claims.
      • Sell the junior claims to people who want levered BTCs (the gamblers).
      • Sell the senior claims as stablecoins.
    • There are pros and cons of this method over the traditional stablecoins:
      • Pro: There is no nexus between this stablecoin and the traditional financial system, so regulators can’t shut down its access to banks because it doesn’t rely on banks.
      • Con: BTC is unpredictable, and if it goes to 0, this method would completely fail.


  • Real estate lender Walker & Dunlop became the first company to shift away from Libor, announcing a US leveraged loan sale that fully embraces regulators' preferred replacement for the London interbank offered rate, which will be benchmarked on the SOFR.
    • There's a small problem: SOFR is a bit lower than Libor, so you need to add basis points to make the pricing correct, or else it could confuse investors.
      • E.g., L+225 is the same price as SOFR+235.
    • This is a problem right now because most loans are still indexed to LIBOR.

NFT Stuff

  • Jacob Claerhour, the founder of Visionrare, has built a crypto marketplace where users spend real money buying fake shares, in NFT form, of real startups.
    • A big problem in finance is that many can't buy shares of private companies/startups because they are only for accredited investors and because there is just not enough stock for sale.
    • A potential solution is selling a derivative on the stock on the blockchain, which Claerhour is trying to do with Visionrare.
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