Tether claims its stablecoin is now partially backed by non-U.S. government bonds

USDT Tether claims its stablecoin is now partially backed by non U.S. government bonds Barmy

Tether publishes collateral audit report for USDT

After the supply of USDT dropped by 9 billion dollars in just one week, the crypto community was extremely concerned about the transparency of the collateral for the ‘national’ stable coin USDT.

In response to the community’s response, Tether has now released a collateral audit report for USDT. Some of the highlights in the report include:

  • Commercial paper assets decreased significantly from $24.2B to $20.1B.
  • US Treasury bill assets increased from $34.5B to $39.2B.
  • Total consolidated assets reached at least $82,424,821,101, exceeding Tether’s consolidated liabilities.
  • The reserve for USDT exceeds the amount required to back the issued USDT.

The audience could review the full audit report here.

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Bonds issued by the U.S. government are widely viewed as safe and highly liquid. Debt from other less developed economies is riskier, as it comes with a higher probability of default.

Tether was not immediately available for comment on which non-U.S. bonds it has bought.

Paolo Ardoino, Tether’s chief technology officer, said the “latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative, and liquid.”

Tether is meant to maintain a 1-to-1 peg to the dollar at all times. But volatility in cryptocurrencies last week, coupled with panic over the collapse of terraUSD, a competing stablecoin, temporarily dragged tether below $1 on several exchanges. TerraUSD, or UST as it’s known, is a so-called “algorithmic” stablecoin that attempted to maintain a value of $1 using code rather than cash.

Tether is a crucial part of the crypto market. With $74 billion in circulation, it’s the world’s biggest so-called stablecoin, facilitating billions of dollars worth of trades each day. Investors often park their cash in tethers in times of heightened volatility in bitcoin and cryptocurrencies.

Tether started releasing quarterly financials after a 2021 settlement with the New York attorney general, which accused the company of lying about its stablecoin’s backing (Tether admitted no wrongdoing).

The documents are signed by MHA Cayman, a little-known accountancy firm based in the Cayman Islands.

Some economists and investors aren’t convinced by Tether’s attestations and are calling for a full audit. The company says such an audit is on the way.

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