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Stablecoin Tether's reserves fell $16 billion in second quarter

Kitco News

LONDON, Aug 19 (Reuters) - Tether, the world's largest stablecoins by market value, said on Friday it had reserves worth $66.4 billion at the end of June, down from $82.4 billion at the end of March.

The reserves statement on Tether's website came a day after it said it had switched to accountancy firm BDO Italia to certify its reserves and would aim to release monthly reports by the end of the year. read more

Stablecoins are a type of cryptocurrency designed to keep constant value, such as a 1:1 U.S. dollar peg. They are widely used in cryptocurrency trading to move funds between different cryptocurrencies or into regular cash. read more

Financial regulators worldwide have warned that stablecoins could pose a risk to wider financial stability, with Britain among major economies looking to regulate the sector.

Tether says its coin maintains its value by holding dollar-denominated reserves to match or exceed the value of Tether coins in circulation.

Tether's $66.4 billion reserve assets exceed its $66.2 billion liabilities, BDO Italia said in the statement.

In June, Tether's chief technology officer Paolo Ardoino said in a tweet that Tether had processed $16 billion in redemptions. A broader crypto market meltdown had prompted investors to swap their Tether holdings back into dollars.

"The report itself looks positive for Tether, because it reinforces that there's probably no bank run big enough to run them down to the parts of their treasury that might be questionable," said Joseph Edwards, investment partner at Securitize Capital.

"The questionable part of the report is switching auditor yet again, especially given that it's to a division with no existent presence in English-language markets," Edwards added. "They're within their rights to do so, but it'll do little to silence critics."

Tether did not provide further comment. Its website shows it has published reports vouching for its reserves from at least five other firms since 2017.

The company's holdings of U.S. Treasury bills fell to $28.9 billion in the second quarter, the statement said, a $10.3 billion drop from the $39.2 billion it held in the first quarter.

Commercial paper and certificates of deposit were down to $8.4 billion, showing an $11.7 billion drop.

In July, Tether said it had slashed its commercial paper holdings as part of a plan to reduce exposure to riskier assets. read more

Ardoino also said the company will have cut its commercial paper holdings to $200 million by the end of August, and to zero by the end of October.

Reporting by Elizabeth Howcroft; Editing by Alexander Smith and David Holmes
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