(Kitco News) - Tether, the company responsible for issuing the largest stablecoin by market capitalization USDT, has announced that it has completely eliminated commercial paper from its reserves, a long-sought goal in the first efforts to shore up its treasury reserves.
“This announcement comes as part of Tether’s ongoing efforts to increase transparency, with investor protection at the core of the management of Tethers’ reserves,” the announcement from Tether read.
Tether’s CTO Paolo Ardoino was quoted earlier in the year as saying that the company intended to cut its exposure to commercial paper by the end of 2022.
Accomplishing this goal required the elimination of more than $30 billion worth of commercial paper holdings, which Tether said it was able to achieve “without any losses,” which the stablecoin provider said is “proof of how Tethers’ reserves are conservatively and professionally managed.”
The bulk of the previously held commercial assets has been replaced with investments in U.S. Treasury Bills (T-Bills), with the firm indicating that it “increased its direct exposure to U.S. Treasuries by more than $10 billion in the last quarter.”
Tether has been working on improving transparency with the public after years of opaque business practices and questions regarding the state of its reserves.
In October 2021, Bloomberg released an article speculating that Tether may have had significant exposure to Chinese commercial paper at a time when the country’s real estate market was on the verge of collapse.
“Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market. This is a step towards even greater transparency and trust, not only for Tether but for the entire stablecoin industry,” the company said.
As part of a settlement with the New York Attorney General's office, Tether began publishing quarterly attestations of its stablecoin reserves in May 2021.
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| A full audit of Tether’s reserves is still months away, says company’s CTO |
In August of this year, the stablecoin issuer partnered with BDO Italia to conduct regular reviews and attestations of its dollar reserves as a way to help boost confidence following the implosion of the TerraUSD algorithmic stablecoin earlier in the year that sparked a contagion effect that rippled across the crypto ecosystem.
On September 30th, the company announced it was below $50M in commercial paper holdings, and it took less than two weeks for the firm to eliminate those holdings to zero.
As always, @paoloardoino and the Tether team stay true to their words. Paolo said CP exposure will be zero by October month end. Done. It’s exciting to see asset reserve CP exposure go to zero. It gives Tether a strong basis to harness even more adoption for the coming decade. https://t.co/sMj4kCONkO
— Gabor Gurbacs (@gaborgurbacs) October 13, 2022
