Arthur Hayes: If Tether holds assets with poor liquidity, an unexpected event could trigger concerns about over-collateralization

In response to Tether CEO Paolo Ardoino's disclosure that the company holds U.S. Treasury bonds generating approximately $500 million in profit each month, Arthur Hayes posted on the X platform stating that while Tether's profits are high, it is uncertain whether there is a specific dividend policy or if target over-collateralization rates are set based on asset types and their volatility.

"If Tether's liabilities are in dollars and its assets are U.S. Treasury bonds, then there is basically not much of a problem; however, if Tether's assets are illiquid private investments, then in the event of an accident, the market will be skeptical of Tether's over-collateralization."