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Why Your USDT Is A Tool, Not An Interest-Bearing Bond

Why Your USDT Is A Tool, Not An Interest-Bearing Bond

The digital asset market is often clouded by a fundamental misunderstanding of the products we use daily. Recently, during a discussion on an X Space hosted by members of a Chinese crypto community, a guest speaker passionately argued that Tether (CRYPTO: USDT) holders are entitled to a share of the interest generated by Tether Limited’s massive reserves. This sentiment is growing, fueled by a desire for passive income in a volatile market. However, this perspective represents a dangerous conflation of financial concepts. We must be clear: 1 USDT is equivalent to $1 USD in terms of purchasing power within the ecosystem, but it is fundamentally not the same as holding a US dollar in a savings account or a Treasury Bill. To demand a direct share of Tether’s corporate interest is to fundamentally misunderstand the architecture of stablecoins and the laws that govern them.

When you exchange your fiat currency for USDT, you are not making a deposit into a bank; you are purchasing a product. Tether Limited operates as a private entity that issues a digital token backed by a basket of assets. The primary value proposition of USDT is liquidity and stability, the ability to move value across borders and between exchanges at the speed of the blockchain. Forgoing your fiat in exchange for USDT is a voluntary trade-off. You give up the sovereign protections and the interest-bearing potential of the traditional banking system in exchange for the utility of a digital asset. To expect the issuer to then hand back its corporate profits is akin to asking a privately owned bank to distribute its quarterly earnings directly to every person holding its banknotes. It is a logical fallacy that ignores the operational costs and risks assumed by the issuer.

The data regarding Tether’s revenue generation is transparent, yet often misinterpreted. As of 2026, Tether continues to manage one of the world’s largest reserve portfolios. The majority of these reserves, roughly 74% to 77%, are held in U.S. Treasury Bills. The remaining assets are diversified across Reverse Repurchase Agreements (11-12%), secured loans (8%), and strategic holdings in precious metals and Bitcoin (12-14%). Tether has become one of the largest global holders of U.S. debt. The interest generated from these trillions of dollars in T-bills belongs to Tether Limited. This income covers their operational expenses, legal defense funds, and provides the capital necessary to maintain the 1:1 peg even during market de-pegging events. This profit is the reward for the company’s management of risk and liquidity; it is not a communal pot for token holders.

Furthermore, we must address the “No Native Staking” reality. Unlike Ethereum or Solana, USDT is not a native token of a proof-of-stake blockchain. It is an asset issued on top of other networks like Tron, Ethereum, and TON. Because USDT does not secure the underlying network through a consensus mechanism, there is no technical “work” being done by a holder simply by letting the tokens sit in a wallet. Without providing a service to the network, such as validating transactions or providing liquidity, there is no logical or technical basis for a “reward.” The concept of “staking” USDT is a misnomer; what people are actually doing is lending, which is a different financial activity entirely.

This leads us to the critical role of CeFi and DeFi intermediaries. If a holder wants to earn interest on their USDT, they must enter the arena of “risk”. Platforms like Binance Earn or decentralized protocols like Aave allow users to generate yield. However, this yield does not come from Tether’s T-bills. It comes from other market participants who are willing to pay a premium to borrow your USDT for leverage or liquidity. In this scenario, the middleman, whether it is a centralized exchange (CEX) or a smart contract, takes a cut for facilitating the match. This is a “fair logic” ecosystem. You are compensated for the counterparty risk you assume. While U.S. Treasury Bills are considered “risk-free” as long as the U.S. government stands, lending USDT on a platform carries the risk of platform insolvency or smart contract failure. You cannot have the “risk-free” rate of a T-bill without actually owning the T-bill.

Looking toward the horizon of 2026, the regulatory landscape is finally catching up to these nuances. The latest draft of the Digital Asset Market Clarity Act provides a definitive answer to the guest speaker’s demands. The Act explicitly states that platforms cannot pay yield simply for “parking” stablecoins. This is a move to prevent stablecoins from being classified as unregistered securities. According to the draft, rewards are only permissible when a user is “active”, meaning they must be providing liquidity or contributing to the operation of a network. This reinforces the journalist’s point: the law itself is being written to prevent the very “mix-up in concept” that the Chinese group was advocating for. If Tether were to pay interest directly to holders, USDT would legally transform into a security, subjecting it to a level of regulation that would likely destroy its utility as a global medium of exchange.

However, the future does hold a potential evolution for Tether. As Tether moves toward launching and scaling its own proprietary blockchain, the distribution of rewards could change legitimately. On its own chain, Tether could implement a system where rewards are distributed to those who help secure the network or facilitate its decentralized operations. In this context, the “interest” is rebranded and restructured as a “network reward.” This is not a payout of T-bill interest; it is compensation for the utility provided to the new ecosystem. Until that fruition, demanding interest for simply holding the token remains a fundamental misunderstanding of the difference between an asset and an investment contract.

The psychological drive behind the speaker’s demand is understandable; everyone wants a piece of the massive profits Tether is generating. But in the world of high-level finance and digital assets, desire does not dictate structure. If you want the interest from U.S. Treasuries, the path is simple: hold USD and buy the Treasuries. If you want the flexibility of the world’s most liquid stablecoin, you hold USDT and accept that the “cost” of that flexibility is the interest you forgo. You cannot trade your fiat for a tool and then demand the tool act like a bank account.

Ultimately, the distinction between 1 USDT and $1 USD is one of “ownership of yield.” When you hold $1 USD in a sophisticated financial setup, you own the potential yield of that dollar. When you hold 1 USDT, you own a digital certificate of value that Tether Limited promises to redeem for $1 USD. The yield generated by the backing of that certificate belongs to the issuer who maintains the system. This is the bedrock of the stablecoin economy. To twist this concept is to invite regulatory crackdowns and economic instability. And to mislead your followers with the wrong concept is also causing instability. Communities must be equipped with the right knowledge, learn from the best and not from the loudest.

As we navigate the complexities of 2026 and beyond, we must remain disciplined in our definitions: USDT is for movement and utility; USD is for savings and interest. Mixing the two serves only to create a “yield mirage” that the law and common sense will eventually evaporate.

 

Source: https://www.benzinga.com/Opinion/26/01/50010512/why-your-usdt-is-a-tool-not-an-interest-bearing-bond

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Why Asian markets are rising while crypto quietly crosses a US$3 trillion threshold

Why Asian markets are rising while crypto quietly crosses a US$3 trillion threshold

Asian markets opened with cautious optimism on Monday, December 22, 2025, buoyed by a confluence of positive sentiment from US equities, a resilient crypto sector, and a series of incremental yet meaningful regulatory shifts in key financial jurisdictions.

Japan’s Nikkei 225 climbed nearly two per cent, while both the Shanghai Composite and Hong Kong’s Hang Seng posted gains, reflecting a broader regional momentum. Only Thailand bucked the trend, with its market expected to drift sideways amid thin holiday trading volumes and a calendar packed with festive closures. This regional advance mirrors a broader pattern, as US stock indices closed higher on Friday, December 19, setting the tone for the week ahead.

The S&P 500 rose 0.88 per cent to finish at 6,834.50, the Nasdaq Composite surged 1.31 per cent, and the Dow Jones Industrial Average added 0.38 per cent to close at 48,134.89. European markets, too, had shown strength earlier in December, with both the FTSE 100 and Germany’s DAX registering gains.

This upward movement unfolds against the backdrop of a holiday-shortened trading week. US markets will close early on Wednesday, December 24, for Christmas Eve and remain shut on Thursday, December 25, for Christmas Day. Lower liquidity during this period often amplifies price swings, and market participants remain on alert for volatility spikes.

Yet investor sentiment appears anchored by the persistent hope of a “Santa Claus rally”, a historical tendency for equities to rise during the final five trading days of December and the first two of January. Futures markets reflected this optimism over the weekend, with Dow Jones Industrial Average futures adding about 50 points, or 0.1 per cent, while S&P 500 futures climbed 0.3 per cent and Nasdaq-100 futures rose 0.5 per cent.

Meanwhile, digital asset markets have seen a modest but notable uptick, with the overall crypto market rising 0.93 per cent over the past 24 hours. This move stems less from speculative euphoria and more from structural developments that signal a turning point in institutional acceptance. Two regulatory initiatives stand out as critical catalysts.

First, the US Federal Reserve has proposed a framework that would grant crypto firms access to its payment infrastructure through special-purpose accounts. Although still in the public consultation phase with comments due by early February 2026, this move represents a significant step toward integrating digital asset players into the mainstream financial plumbing of the United States.

Second, and perhaps more immediately impactful for Asia, Hong Kong’s Insurance Authority has unveiled draft rules that would permit insurers to allocate capital to crypto assets, provided they maintain a 100 per cent risk charge against such exposure. In practical terms, this means insurers would need to hold capital equal to the full value of any crypto position, making such investments expensive but legally viable for the first time under a formal regulatory framework.

Hong Kong’s proposal is not merely about crypto exposure. It also creates incentives for insurers to invest in infrastructure projects tied to Hong Kong or mainland China, including developments in the Northern Metropolis near the China border. This dual focus aligns with the city’s broader economic strategy of leveraging private capital to support public initiatives amid fiscal constraints.

Importantly, the regulator emphasised that its decisions were made independently, even as they dovetail with governmental priorities. Stablecoins receive differentiated treatment under the proposal, with risk charges linked to the fiat currencies they track, provided the issuer is regulated domestically. This nuance reflects a calibrated approach to risk differentiation, acknowledging that not all digital assets exhibit the same volatility or counterparty risk profiles.

From a market-structure standpoint, Hong Kong’s move could unlock substantial institutional capital. The territory hosts 158 authorised insurers, which collectively generated HK$635 billion (US$82 billion) in gross premiums in 2024. Even a modest one per cent allocation to crypto under the new rules could channel over US$800 million into the sector, not to mention potential flows into tokenised infrastructure assets.

However, the 100 per cent capital charge ensures that such allocations remain marginal rather than transformative in the near term. The proposal remains subject to public consultation from February through April 2026, and industry feedback may prompt adjustments, particularly given concerns that too few infrastructure projects currently qualify for preferential treatment.

The crypto market’s technical posture complements these regulatory tailwinds. The total market capitalisation has reclaimed its pivot point at US$3.01 trillion, bolstered by a bullish MACD crossover that added US$5.96 billion in histogram value. Yet caution remains warranted. The RSI-14 hovers at 42.98, signalling neutral rather than overtly bullish momentum, and resistance looms at the 23.6 per cent Fibonacci retracement level of US$3.11 trillion.

Spot trading volume remains subdued, down 47 per cent compared to derivatives activity, suggesting that much of the current price action is driven by leveraged positions rather than genuine accumulation. This imbalance could make the market vulnerable to sharp corrections if sentiment shifts.

Sectorally, privacy-focused tokens and Binance ecosystem projects led recent gains, with Midnight’s NIGHT token surging 35 per cent. This indicates a broadening of risk appetite beyond Bitcoin, although Bitcoin’s dominance remains steady at 58.98 per cent. The CoinMarketCap Altcoin Season Index currently sits at just 17 out of 100, underscoring that despite pockets of strength, the market remains firmly in “Bitcoin Season.” Spot volume across altcoins has nonetheless improved by 45 per cent, indicating renewed liquidity in peripheral assets.

Commodities have also played a role in shaping the macro backdrop. Gold futures reached an unprecedented high of US$4,421 per ounce, while silver surged past US$69.27, both driven by escalating geopolitical tensions and the traditional year-end flight to safety. Oil prices rose nearly one per cent after the US announced the seizure of another Venezuela-linked tanker, reinforcing supply concerns. The ICE US Dollar Index ticked higher, reflecting the greenback’s relative strength, even as global risk assets advanced.

Despite recent equity rallies, some analysts warn that valuations in US markets appear stretched. The strong performance of the S&P 500’s information technology sector, which rallied two per cent on Friday, its best showing since November 24, may have already priced in much of the good news.

For the week ending December 19, the S&P 500 edged up just 0.1 per cent, the Nasdaq gained 0.5 per cent, and the Dow actually declined 0.7 per cent, breaking a three-week winning streak. This mixed performance suggests that while momentum exists, it is fragile and dependent on continued positive catalysts.

In summary, the current market environment reflects a delicate balance between optimism and caution. Regulatory progress in both Washington and Hong Kong provides a foundational boost to crypto’s institutional legitimacy, even if near-term capital flows remain constrained by stringent requirements. Equity markets ride the seasonal hopes of a Santa Claus rally, supported by tech strength but shadowed by valuation concerns. Commodities signal underlying geopolitical unease.

And while Bitcoin briefly touched US$89,000, the broader crypto market’s resilience hinges on whether it can sustain levels above the critical US$3.03 trillion mark, the 50 per cent Fibonacci retracement level and maintain its tight correlation with the Nasdaq-100, which currently stands at +0.61 over the past seven days.

The central question now is whether Hong Kong’s regulatory blueprint will evolve from a symbolic gesture into a genuine conduit for institutional capital. The answer will depend not only on the final rulemaking but also on how global insurers interpret the risk-return calculus under a 100 per cent capital charge.

If even a fraction of the sector’s US$82 billion in annual premiums flows into crypto or tokenised infrastructure, it could mark the beginning of a new phase of market maturation, one where digital assets transition from speculative instruments to legitimate components of diversified institutional portfolios.

Until then, markets will remain in a holding pattern, lifted by regulatory tailwinds but grounded by structural constraints.

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Why Bitcoin’s correlation with gold just hit a record high

Why Bitcoin’s correlation with gold just hit a record high

As the final full trading week of 2025 begins, financial markets across Asia are retreating under mounting doubts about the sustainability of the AI-driven tech rally that has powered global equities for much of the year.

The MSCI Asia Pacific index declined 0.7 per cent, with South Korea home to leading semiconductor firms and a bellwether for AI infrastructure demand falling 1.5 per cent after a tech-led selloff on Wall Street. Chinese equities also edged lower amid weak macro data, retail sales growth hit its lowest level since the pandemic, and fixed asset investment continued to slump. Meanwhile, US equity-index futures rose modestly by 0.2 per cent, hinting at potential stabilisation.

In this volatile mix, gold extended its rally for a fifth consecutive day, up more than 60 per cent year-to-date, while silver has more than doubled, both on track for their best annual performance since 1979. These moves reflect a broader shift in investor psychology away from speculative growth and toward capital preservation.

The cryptocurrency market, which surged dramatically through 2025 alongside tech equities, is now exhibiting signs of strain. Bitcoin and the broader market dipped 0.8 per cent in the past 24 hours, extending a 4.8 per cent monthly decline. This correction is not driven by a wave of selling but by a confluence of structural vulnerabilities, evaporating liquidity, collapsing sentiment, and an ongoing reset in leveraged positioning. Together, these forces are exposing the fragility beneath Bitcoin’s recent price stability.

A key red flag comes from on-chain data showing a sharp decline in Bitcoin exchange flows. According to CryptoQuant analysts, inter-exchange flows, the movement of BTC between trading venues, have slowed to levels not seen since 2018. This metric is critical because it reflects the activity of arbitrageurs and market makers who ensure consistent pricing and deep order books across platforms. When these flows dry up, exchanges become siloed, and liquidity thins.

The consequence is a market hypersensitive to even modest trades. Despite Bitcoin’s apparent calm, it has traded sideways between US$80,000 and US$94,000 since early December; the underlying mechanics have grown precarious. Exchange balances are already near historic lows, meaning there is little immediate sell pressure, but also minimal buffer to absorb shocks. In such conditions, price stability becomes illusory, and sharp, unexplained swings become more likely.

This liquidity crunch directly amplifies volatility risk. Spot trading volumes have plunged 36 per cent in 24 hours, while derivatives volume fell by 35.9 per cent. Thin order books mean slippage increases, and directional moves accelerate. Altcoins suffer disproportionately in such environments. Their market share, or altcoin dominance, has slipped to just 29.1 per cent, as traders rotate into Bitcoin, the perceived safest haven in crypto. Bitcoin’s dominance now stands at 58.6 per cent, underscoring a clear flight to quality within the digital asset space.

Sentiment has also deteriorated sharply. The Crypto Fear & Greed Index has dropped to 24 out of 100, nearing November’s extreme fear low of 16. Social media analysis reveals growing scepticism about Ethereum’s revenue model and the economic sustainability of Layer 2 ecosystems, two pillars of the post-merge narrative.

Investors are increasingly prioritising downside protection over yield or speculative upside. This shift is mirrored in the broader financial system. Stablecoin ETFs have seen US$9.97 billion in outflows this month alone, draining liquidity from risk assets and reinforcing a defensive posture across the board.

Simultaneously, the derivatives market is undergoing a necessary but painful deleveraging. Bitcoin liquidations surged by 1,528 per cent in 24 hours, reaching US$59.09 million, with 97 per cent stemming from long positions. These are largely leveraged bets placed during the October rally toward US$126,000 that are now being unwound. This is not a panic-driven collapse. Open interest in Bitcoin futures has actually increased by 9.8 per cent, suggesting new participants are likely entering with a bearish or neutral bias.

Funding rates, which had turned deeply negative, have rebounded to plus 0.001 per cent, indicating a temporary balance between buyers and sellers. According to CryptoQuant, the combined open interest and funding Z-score sits at minus 0.28, slightly below its historical average. This signals a gradual reduction in leverage rather than a disorderly liquidation cascade, a reset, not a rout.

This nuanced picture matters. The current market fragility stems not from overwhelming selling pressure but from a lack of active participation. Traders are avoiding large positions, liquidity providers have withdrawn, and sentiment has turned cautious. Long-term fundamentals remain intact.

Institutional adoption continues, on-chain supply dynamics stay favourable, and Bitcoin’s correlation with gold has spiked to an extraordinary plus 0.93 over the past 24 hours. This suggests a growing cohort of investors now views Bitcoin less as a tech proxy and more as a monetary asset, a development that could decouple it from Nasdaq-driven volatility over time.

For now, Bitcoin trades within a narrow US$87,892 to US$90,319 range. A break below US$88,000 could trigger cascading liquidations given the thin liquidity environment, while sustained trading above US$89,000 might attract spot buyers and signal renewed confidence.

The market stands at an inflexion point, where short-term fragility clashes with long-term strength. Until exchange liquidity recovers and sentiment stabilises, Bitcoin will likely remain susceptible to sharp, unpredictable swings, calm on the surface, but increasingly brittle underneath.

 

Source: https://e27.co/why-bitcoins-correlation-with-gold-just-hit-a-record-high-20251215/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j