Deltec, an offshore bank that holds the reserves for Tether, announced recently that it has a large position in Bitcoin. However, it didn’t specify the name of the client it is holding Bitcoin for.
A huge Bitcoin position
Deltec is based in the Bahamas and holds positions for Tether, a stablecoin issuer. The bank said that it has a “large position” in Bitcoin but did not reveal details. Hugo Rogers, the chief investment officer of the firm said in a 2021 review video,
“It also includes a large position in bitcoin, which has received a lot of attention recently. We bought bitcoin for our clients at about $9,300, so that worked very well through 2021. And we expect it to work well in 2021 as the liquidity crisis continues to run hot.”
Tether’s ties with Deltec
Tether is the most popular client of the offshore bank. The stablecoin issuer is responsible for USDT, the largest USD-backed stablecoin in the world with a total circulating supply of 24.3 billion coins. Each Tether coin is equivalent to 1 USD in value.
The stablecoin issuer suggests that each USDT coin is backed fully by the firm’s dollar reserves. This means that Tether’s assets in the bank should be worth at least $24.3 billion. The firm suggests on its website that its reserves include traditional currency and cash equivalents. It also includes other assets as well as receivables related to loans given to third parties.
If Deltec is holding Bitcoin for the stablecoin firm, then a crash in the price of the coin may also lead to a crash in Tether’s backup reserves which could be a scary situation. According to the last published transparency updates of Tether (published on June 1, 2018), the firm had $2.54 billion in USD distributed across two of its bank accounts. This amount was more than the reported market cap of the firm at the time.