Tether Reduces Commercial Paper Reserves by Another $5B

Tether Reduces Commercial Paper Reserves by Another $5B

News
Maxtrx

Key Takeaways

Tether is reducing its paper asset reserves by almost $5 billion. The company is trying to increase its share of U.S. treasury bills and intends to bring its paper holdings to zero. The portfolio rebalancing should in theory have no impact on the state of USDT’s 1:1 backing.

Share this article

USDT issuer Tether is shifting its reserves away from commercial paper to low-risk U.S. treasury bills.

Tether Cuts Paper Asset Reserves

Tether is reducing its commercial paper reserves.

The USDT stablecoin issuer announced today that it would slash its commercial paper portfolio by $5 billion by the end of July 2022, bringing its paper asset holdings down from $8.4 billion to $3.5 billion. The development comes after Tether announced it had cut its paper reserves on May 19, and forms part of the company’s goal to bring its paper asset holdings down to zero and increase its share of U.S. treasuries. 

Tether’s USDT is the world’s biggest stablecoin with a market capitalization of about $66.5 billion. Stablecoins are crypto assets designed to track the price of other assets such as the dollar. Tether claims USDT is 100% backed 1:1 with reserves, meaning that token holders should always be able to redeem their coins for dollars without issue. USDT temporarily lost its peg to the dollar in the fallout from Terra’s collapse last month, but Tether continued to honor redemptions amid the event. It recovered within a few days. 

The company has been the subject of numerous rumors over the years over the state of its reserves. Critics, popularly known as “Tether Truthers” within the crypto community, argue (despite multiple initiatives by Tether to bring transparency to its records) that the stablecoin issuer could eventually suffer a bank run event, to which Tether has responded by issuing numerous statements in a bid to improve its transparency. 

At the time of writing, commercial paper, cash and short-term deposits currently constitute 85.64% of Tether’s holdings, while corporate bonds, funds and precious metals make up 4.52%, secured loans account for 3.82%, and other investments including digital tokens represent the remaining 6.02%.

The company’s commercial paper, cash, and short-term deposit portfolio is split with 55.53% in U.S. treasury bills, 28.47% in commercial paper, 9.63% in money market funds, 5.81% in cash, 0.15% in reverse repurchase agreements, and 0.41% in non-U.S. treasury bills. These values are updated daily, and assurance opinions carried out by auditor Moore Cayman are published quarterly.

Tether CTO Paolo Ardoino came out this week to declare that multiple crypto firms were attempting to short USDT, meaning they were betting on the stablecoin losing its peg. At the time of writing, the bet is still unsuccessful.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

Share this article

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

Binance

Source link

Latest Crypto News


Popular Links

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments