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Evergrande and China’s Looming Risk to Tether

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David Z. Morris

David Z. Morris is CoinDesk's Chief Insights Columnist. He holds Bitcoin, Ethereum, Solana, and small amounts of other crypto assets.

Follow @davidzmorris on Twitter

The stablecoin issuer Tether this week declared that it doesn’t hold short-term debt issued by troubled Chinese real estate developer Evergrande. Since Tether doesn’t disclose specifics about the commercial paper that substantially backs its “stablecoin,” this is a bit like serving a houseguest a sandwich and loudly assuring them that it is absolutely NOT made from diseased horsemeat.

It seems increasingly likely that Evergrande is fated instead for the glue factory. But it could still take Tether with it, depending on what’s actually in that stablecoin sandwich.

Though its main product since its founding in the 1990s has been housing, Evergrande has grown into a huge conglomerate with products ranging from bottled water to electric cars to a soccer team. It expanded by borrowing aggressively, including during periods when China’s economic outlook was seen in much rosier terms globally than it........

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