1xbit

Tether swaps CP for US Treasuries

Tether, the corporation behind the $69 billion USDT stablecoin, liquidated its commercial paper.
| Cryptopress
Updated: October 14, 2022

CryptoPress

Tether, the company behind USDT, the most valuable stablecoin on the crypto market at $69 billion, has sold all of its commercial paper.

The bulk of the company’s reserve assets are now invested in U.S. Treasury Bills. T-Bills are Treasury-backed, short-term U.S. government debt obligations having maturities of one year or less.

USDT Assets – Tether

The popular cryptocurrency tied to the U.S. dollar said that the move is part of its “continuing efforts to promote transparency” and to back its tokens with “the safest reserves in the market.”

On Thursday, Ardoino said in a tweet that Tether may pay $7 billion, or 10% of its reserves, within 48 hours.

“Ask your bank or other stablecoins if they can accomplish this, within the same time range, of course,” he stated.

In the last year, the stablecoin segment of the cryptocurrency industry has clearly had trust challenges.

In 2018, tether had to pay a multimillion-dollar fine after a legal battle with the New York attorney general’s office over its reserves. In May, investors lost tens of billions of dollars when one of the most popular stablecoin projects, terraUSD (UST), went bankrupt.

Previously, Tether stated that all of its tokens were backed by dollars kept in a bank at a 1:1 ratio. But after settling with the New York attorney general, the business said that its token was backed by a number of other assets, including commercial paper.

Tether transparency has long been overdue

Since at least 2017, nobody has known with certainty what supported USDT.

The statements made by the issuer were regularly criticized by industry players, law enforcement agencies, government officials, and legal experts.

As part of its efforts to silence these critics, Tether has worked hard this year to reduce its reliance on commercial paper from $20 billion in the second quarter to $8.5 billion in the third quarter.

Tether will now have to show proof of its USDT reserves, such as account statements from banks and other financial institutions.

BDO’s attestation from August says that Tether’s assets include $28.85 billion in US Treasury Bills and $6.81 billion in money market funds.

An additional $3.48 billion is invested in corporate bonds and precious metals, while $5.55 billion is in “other investments.” Approximately $4.5 billion are secured loans.

With the August transition from $8.4 billion in commercial paper to US Treasury Bills, Tether’s total holdings are around $66.4 billion.

Bloomberg says that Tether has never given a full breakdown of its commercial paper, and it has been hard for expert traders to find proof that the company is involved in the market for such debt instruments.

Transparency at last?

Tether has also been promising for more than five years to do a full audit of its stablecoin reserves but hasn’t done so. Instead, it has given attestations based on information from its management that shows a snapshot of its balance sheet.

As part of a lawsuit that claims USDT illegally drove up the prices of cryptocurrencies from 2014 to 2018, a US court told the stablecoin’s issuer last month to show proof of the assets backing the stablecoin.

Tether will now have to show proof of its USDT reserves, such as account statements from banks and other financial institutions.

Photo: DrawKit Illustrations on Unsplash.

© 2022 Cryptopress. For informational purposes only, not offered as advice of any kind.

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