Tether slashes commercial papers to zero, replaces investments with T-Bills October 17, 2022
Tether slashes commercial papers to zero, replaces investments with T-Bills <br><br>
Tether slashes commercial papers to zero, replaces investments with T-Bills
The company behind USDT stablecoins, Tether limited Inc. has reduced its commercial paper holdings to zero and replaced them with U.S Treasury bills, the company made the announcement on Oct 13.
Tether claimed to disclose specifics about the USDT reserve in its attestation reports, which will increase its openness.
The move dictates the company’s “ongoing efforts to increase transparency” and to make available its tokens with “the most secure reeves in the market” in a way to secure and protect the investor. Tether tweeted on Oct 13, “Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market.”
This will not only balance out the company’s commercial paper holdings but also bring in improved transparency, and trust for the company as well as the entire stablecoin industry.
The stablecoin issuer remained under public criticism for not being transparent about its reserves detractors, and the composition of its assets underlying the USDT stablecoin since 2017.
Chinese business papers accounted for 85% of Tether’s reserves, as it was reported in May 2022. In denial, Tether clarified that less than 25% of its reserve includes commercial paper, but it committed to reducing that percentage to zero by year’s end.
Tether has been under fire for not being transparent about the types of assets underlying the USDT stablecoin since 2017. It was reported in May that Chinese business papers accounted for 85% of Tether’s reserves. In rebuttal, Tether claimed that less than 25% of its reserve was made up of commercial paper, but it committed to reducing that percentage to zero by year’s end.
On July 1, the Company shared an update on its progress in further reducing its commercial paper portfolio to a low of $3.5B, which was on track with Tether’s commitment to the community. On September 30th, the company announced it was below $50M in commercial paper holdings, as shared by the Tether news report.
Unlike U.S Treasury bonds, commercial papers are unsecured debt obligations issued by a corporation or financial institution that mostly have higher credit risk, they are short-term, also, their value depends on the issuing company. Commercial papers are considered to be less reliable and less stable than other debt instruments such as U.S Treasury bonds.
The company said, “Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market.”
Tether shared that as the company has now reduced all the commercial papers from its reserves, it has increased its direct exposure to the U.S., and has chipped down $30 billion dollars and more commercial papers without any losses.
At present, the tether tokens in circulation are estimated at about 68.4 billion, which means that USDT’s market capitalization is $68.4 billion.
In August, the stablecoin issuer onboarded a member of BDO Global’s accounting organization, BDO Italia to conduct consistent reviews and attestations of Tether’s dollar reserve. They further said, the company will increase its frequency of reporting from quarterly to monthly.