Tether Decreases Commercial Paper Holdings by $5 Billion

The issuer of the USDT stablecoin said today that it would reduce its commercial paper portfolio by $5 billion by July 31, 2022, bringing its paper asset holdings from $8.4 billion to $3.5 billion.

The news follows Tether’s announcement on May 19 that it has reduced its paper reserves, and is part of the company’s plan to reduce its paper asset holdings to zero and raise its proportion of U.S. treasuries.

Tether’s USDT is the largest stablecoin in the world, having a market valuation of over $66.5 billion. Stablecoins are digital currencies that are meant to mirror the value of another asset, such as the dollar. Tether asserts that USDT is backed 1:1 by reserves, therefore token holders should always be able to exchange their tokens for dollars without trouble. In the aftermath of Terra’s collapse last month, USDT momentarily lost its peg to the dollar, yet Tether continued to fulfil redemptions throughout the incident. It recovered in a matter of days.

The company’s reserves have been the subject of several speculations over the years. Critics, popularly known as “Tether Truthers” in the cryptocurrency community, argue that the stablecoin lender could eventually experience a bank-run event, despite Tether’s numerous efforts to improve the transparency of its records. In response, Tether has issued a number of statements in an effort to increase its transparency.

The commercial paper, cash, and short-term deposit portfolio of the corporation is composed of 55.53 percent U.S. treasury bills, 28.47 percent commercial paper, 9.63 percent money market funds, 5.81 percent cash, 0.15 percent reverse repurchase agreements, and 0.41 percent non-U.S. treasury bills. These values are updated daily, and auditor Moore Cayman’s opinions are released periodically.

This week, Tether CTO Paolo Ardoino said that a number of crypto businesses were trying to short USDT, or wager on the stablecoin losing its peg. At the time of writing, the wager continues to fail.

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