This is, in principle, a very simple and attractive business, but Tether has found it hilariously difficult as an operational matter. In principle the way you do this business is you have people wire you the dollars, and you send them their USDT (on the blockchain), and you keep the dollars in a bank account or money-market fund or Treasury bills or whatever earning like 4%, and if people want their dollars back you wire them the dollars, and meanwhile you’re earning like $200 million a month on the float and life is good.
But in practice what seems to happen is that people go to their banks and are like “I would like to wire Tether $1 million to buy stablecoins” and the banks say “no.” And then Tether goes to banks and says “we would like to deposit the $67 billion backing our stablecoins” and the banks say “no.” And then people go to Tether and say “I would like you to wire me back $1 million for my stablecoins” and everyone’s banks say “no.” I am exaggerating, but the basic fact of Tether’s life seems to be that a lot of the financial intermediaries — banks, brokers, auditors — who would normally be thrilled to work with a $67 billion pot of money, for some reason, aren’t. So Tether has to do this very simple banking business in a very complicated way.
Source: Tether – Bloomberg