The issuer of the famous stable coin USDT revealed a 17% reduction of commercial paper in its reserves. The message addresses fears of a possible decoupling from the dollar.
Tether, the company in charge of the dollar-pegged stable coin USDT, has released a new report highlighting the current status of its reserves.
In its Consolidated Reserves Report, revealed this Thursday, the company highlighted a 17% reduction in its commercial paper holdings to upgrade the quality of its reserves. Tether expressed that its commercial paper holdings went from $24.2 billion to $20 billion during the first quarter of 2021.
As of March 31, the date the first quarter ended, Tether reserves remained at $82 billion, of which 86% consisted of cash and cash equivalents. According to the report, the rest includes $4 billion in corporate bonds, $3 billion in secured loans, and $5 billion in other investments like digital assets.
Tether Lessens its Commercial Paper by 20%
Although the company recognized making further progress in its decrease of commercial paper since then, commercial paper is still a short-term unsecured debt managed by an entity.
In another announcement highlighted by Decrypt, Tether’s CTO Paulo Ardoino expressed that the entity keeps going with an additional 20% cut since the beginning of April.
The news about the lowering of commercial paper arrived after Bloomberg highlighted a controversial report last year. It explained that much of Tether’s commercial paper got managed by big Chinese entities, which made many analysts question the quality of the company’s reserves.
To date, Tether has refrained from unveiling the names of said entities. CoinDesk reports that the company’s latest research did not point to the list of entities that rate the commercial paper, except for “Standard & Poor’s Ratings, or equivalent ratings from Moody’s, Fitch, or others nationally statistical rating organization. The Tether report also does not bring the geographic location of the issuers of the commercial paper.
Afraid of USDT Untethering
The USDT issuer also pointed out that it has slightly lessened its cash deposits to grow its holdings of US Treasuries. According to CoinDesk, Tether’s cash went from USD 4.2 billion to USD 4.1 billion, while the bonds ran from USD 34.5 billion to USD 39.2 billion.
Other assets in the company’s reserve did not appear to change much. As reported by that medium, the “Other investments” category, which includes cryptocurrencies, has remained constant, falling slightly from USD$5.02 billion to USD$4.96 billion. However, Tether has not disclosed which assets specifically make up this category, which has led to some uncertainty.
Tether’s most recent report comes along with a certification from independent auditing firm MHA Cayman, which independently confirmed the accuracy displayed by Tether’s quarterly reserves report.
Tether’s decoupling came amid the sad situation of Terra’s algorithmic stable coin, UST, which lost its attachment to the dollar. Since then, USDT’s market capitalization crumbled to $9 billion amid increased sell-offs and a more comprehensive panorama for correction in the digital assets market.
By: Jenson Nuñez
