Blockchain.com CEO says there’s never been ‘as high a chance’ of US default, while Tether CTO considers it unlikely
Both Tether and Blockchain.com executives have commented on the possibility of the US government defaulting on May 25.
Tether is not in danger, says CTO
Tether CTO Paolo Ardoino said the U.S. is unlikely to default in the coming weeks. He said on The Block’s Scoop podcast:
“……I do not think so” [a U.S. default] It will happen—I mean, it will be devastating for the U.S. economy. I think everyone is sitting tight to watch what is going on and what will happen. “
He also suggested that Tether was not in danger. While much of Tether’s reserves are made up of U.S. Treasuries, Aldoino said Tether provides ample liquidity to the company and has begun using means of holding excess reserves.
Ardoino said these measures would protect the USDT stablecoin from de-pegging in the event of a “black swan” event, possibly including defaults.
A recent report revealed that Tether owns $53 billion in US Treasuries. This makes up his 64% of Tether’s reserves. This also means that Tether holds roughly the same number of government bonds as Thailand, the 25th largest holder of US Treasuries.
The CEO of Circle, Tether’s main competitor, coincidentally said earlier this month that the firm would not hold long-term US Treasuries in anticipation of a potential default.
Blockchain.com CEO Comments on US Default
Ardoino is confident that the crypto industry can survive a default, but there is limited optimism about the situation.
Blockchain.com CEO Peter Smith said at the Qatar Economic Forum 2023:
“In the short term, I think a US debt default or a US recession would probably have a negative impact on crypto… [But] I think they are probably good for cryptocurrencies in the long run. “
Smith explained that the recent bank failures caused initial losses, but defaults could benefit cryptocurrencies in the long run, much like the market boom that followed.
Based on his views on U.S. politics, he also believes it “probably has never been more likely” for officials to fail to raise the debt ceiling, which could lead the U.S. to default. argued that to some extent. “Now it’s incredibly entrenched and it’s very difficult to get anything done,” Smith added.
President Joe Biden and Congressional Leader Kevin McCarthy Failed reach agreement on spending and debt ceilings As of May 25, according to Reuters. Treasury Secretary Janet Yellen said a default could occur by June 1 if no deal is reached between leaders.
The CEO of PostBlockchain.com said a U.S. default has never been “such a high probability,” while Tether’s CTO thinks it is unlikely that it first appeared on CryptoSlate.