Tether gives USDT collateralized loans; OnlyFans creators believe Web3 is the answer; Binance plans to delist stablecoins in European market due to MiCA compliance
Tether started lending USDT stablecoin to its long-term customers again. The company said it would reduce USDT collateralized loans to zero in 2023
Stablecoin issuer Tether has started lending USDT stablecoins to customers, a year after the company pledged to stop offering secured loans. Tether’s collateralized loans sparked concerns among crypto investors as it could have potential risks and destabilize the market due to its dominance in stablecoins.
Tether collateralized loans rise again
Tether has resumed lending its stablecoin USDT to its customers again after a brief pause. With this move, Tether aims to protect them from liquidity shortages or asset sales at unfavorable rates. The move follows a large number of short-term loan requests in Q2 2023, The Wall Street Journal reported on 21 September.
Tether said it had $5.5 billion in loans as of June, up from $5.3 billion in the previous quarter. These loans provide little information about the borrowers or the collateral accepted. The loans are given in USDT.
Tether’s lending poses a potential risk to the crypto world. The majority of assets listed in the company’s reports are Treasury bills and other safe instruments that can be easily converted into dollars. Loans are in a different position. So Tether cannot be sure that the loans will be repaid or that the collateral it holds will be sufficient.
The resumption of lending is a big change from December 2022, when the company said it would reduce its secured loans to zero through 2023. Tether spokesperson Alex Welch said:
“In the second quarter of 2023, we received several requests for short-term loans from customers with whom we have developed long-term relationships, and we made the decision to honour these requests.”
Tether’s USDT lending practice contradicts some of the company’s other statements. As of 30 September 2022, the company had thin capital of about $250 million, or 0.4 percent of its assets. At that time, loans were $6.1 billion, or 9 percent of total assets.
OnlyFans creators believe Web3 is the answer!
Adult content creators continue to migrate to decentralised versions of OnlyFans and Patreon following recent payment difficulties and threats of de-platforming.
Leon Lee, founder and CEO of Only1, a decentralised version of OnlyFans, said:
“The role of intermediaries is diminishing, while the role and revenue of content creators is increasing.”
In August last year, creators on Patreon reported that they were having difficulty withdrawing their earnings from the platform because payments were being flagged as fraudulent by banks.
Meanwhile, many creators have not forgotten that OnlyFans attempted to ban sexually explicit content in 2021, only to reverse the decision a few days later.
Addressing this issue, Lee argues that as long as creators remain on centralised platforms using traditional payment rails, they will always be at risk of being removed from the platform.
Only1 is set to launch in March 2023 on the Solana blockchain, which is backed by Animoca Brands. However, the platform is just one of many startups looking to capture the magic of adult subscription platforms with a decentralised crypto twist.
In 2022, OnlyFans model Allie Rae founded WetSpace, a crypto-backed adult content platform, as an alternative to OnlyFans.
More recently, creators on OnlyFans have begun flocking to Friend.tech, a new decentralised social media platform built on Coinbase’s Layer-2 network.
Lee believes that more creators will eventually flock to decentralised platforms that give them full autonomy over their content and full ownership over the money they make.
An inevitable future where there is no middleman between fans and creators. This is the obvious but unrealised potential of blockchain technology.
Binance plans to delist stablecoins in European market due to MiCA compliance
A Binance executive said in a public session with the European Banking Authority (EBA) that they plan to delist stablecoins from the European market by June 2024.
Marina Parthuisot, head of the legal department at Binance France, said that:
“We are heading towards the delisting of all stablecoins in Europe on 30 June”, as no projects have been approved yet.”
MiCA’s rules on stablecoins are expected to come into force in June 2024
Lawyers reviewing the new EU legislation in July said the cap on stablecoin transactions could hinder the adoption of cryptocurrencies. Under MiCA, a cap of $216 million will be imposed on all stablecoins, including USDT and USDC.
Many major companies and countries, such as Binance, are also working to comply with MiCA legislation.
France has changed its crypto licensing policy to comply with MiCA.
Binance CEO CZ used the “4” sign to symbolise FUD over X on the subject. CZ noted that they are already prepared for MiCA and will be ready on the given date.
