Evergrande and Crypto
What does the Evergrande debt crisis mean for crypto?
You may have heard, there is a real prospect that Evergrande, one of the largest property developers in China, could default on debts worth up to $300bn.
Fitch, the ratings agency, has said it is likely that Evergrande will default as it is unable to raise capital quickly enough in order to service its growing levels of debt.
China's major banks have been notified by the housing authority that Evergrande Group won't be able to pay loan interest due Sept. 20, a media report says, underlining the broadening impact of the property developer's liquidity crisis https://t.co/dRBmiMFnmc pic.twitter.com/NjvYOQ0Kt7— Reuters (@Reuters) September 15, 2021
The Evergrande share price is down by over 50% in the last month as fears mount over the potential ramifications for the wider Chinese economy.
Evergrande ☠️ pic.twitter.com/7qN3K2JO4V— TradingView (@tradingview) September 17, 2021
Now, out of nowhere, there have been suggestions that the real estate developer’s collapse could have a knock-on effect on the crypto industry.
Please tell me it's not true...— FinTwit (@wallsteetbets) September 16, 2021
Now they are talking about the possible CRYPTO exposure to EVERGRANDEhttps://t.co/iUr41zFVkN pic.twitter.com/oHElKLUPAs
As reported by CoinTelegraph, David Llewellyn-Smith, an Australian economist, suggested that Tether, one of the leading issuers of stablecoins, could be exposed to commercial paper issued by the “$300bn debt monster”.
He added that Bitcoin may comprise one of Evergrande’s counterparties via Tether’s dominance as a Bitcoin pairing.
Tether has denied holding any commercial paper issued by the real estate giant amid concerns that Evergrande’s struggles may impact the commercial paper market.
Commercial paper is a typically used type of unsecured, short-term debt instrument issued by businesses, usually for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities.
Stablecoin Tether says holds no Evergrande commercial paper https://t.co/HWaRCT6jya pic.twitter.com/0FTwdAx4HB— CNA (@ChannelNewsAsia) September 16, 2021
“Tether does not hold any commercial paper or other debt or securities issued by Evergrande and has never done so,” said a spokesperson for Tether.
“As we have indicated in our published statements and in our most recent assurance attestation with a reporting date of June 30, 2021, the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.”
some anons on twitter just arbitrarily decided tether holds evergrande and it became a standard talking point for industry critics. ppl really b believing any old thing bc they want it to be true— nic carter (@nic__carter) September 16, 2021
Reports suggest that Evergrande is still looking into its options regarding an extension of its obligations, while it has been claimed that a bailout request from the company’s founder has been rejected by authorities in Guangdong.