According to online sources, Tether has reportedly come out with a statement clarifying that it does not hold any of Evergrande’s short-term debt. The Chinese real estate group, Evergrande, is undergoing a huge financial crisis. It has been found that the property developer is reeling under a massive debt of $300 billion. There is speculation that Evergrande might bring Tether down along with it.
The Evergrande Group was founded in the 1990s, and it was mainly involved in developing housing projects. Since then, it has grown into a large corporation that has expanded and invested in other products like electric cars, bottled water, and also a soccer team. This expansion was possible only by excessive borrowing. It has been found that the company continued to borrow even when the economic conditions in China were far from good. The towering debt crisis the corporation is currently facing hints at grave mismanagement and fraud. Many apartments which have huge investments by people have not been built.
Even though Tether has clarified that it does not hold any debt items from Evergrande, it could still come under fire from Chinese regulators. The reactive regulatory environment of China can pose a threat to the functioning of Tether. The anxieties of the Stablecoin issuer largely center on the fact that they might hold the Chinese commercial papers, and not specifically Evergrande’s. This is because Evergrande’s debt is spread across a number of banks and financial institutions. Many financial analysts are worried about the collapse of Evergrande and the fact that it could possibly cause a systematic collapse of the financial markets around the world.