Latest Tether Reports Show 17% Reduction In Commercial Paper

The latest tether reports show a 17% reduction in commercial paper and the latest assurance indicates the company made a few changes to its reserve backing so let’s read more today in our latest Tether news.

The latest Tether reports came out after the stablecoin briefly lost its 1:1 peg with the US dollar and it shows that Tether reduced the commercial paper in USDT reserves by 16.8%. Tether’s $82 billion reserves were 86% cash and cash equivalents with the rest including $4 billion in corporate bonds, $3 billion secured loans, and $5 billion in other investmetns such as crypto assets. The cash and cash equivalents portion consisted of 52% US treasury bonds, 37% commercial paper, and the rest of the money market funds with cash deposits.

The reports provide more details on the reserves from March 31 and show a 17% reduction in the company’s holdings of the commercial paper since the end of 2021. this means that it accounts for $20 billion of the reserves backing USDT. The commercial paper is unsecured and so short-term debt is issued by a corporation. In the accompanying press release, the chief technology officer Paolo Ardoino said the company made more progress since then:

“In fact, since April 1, 2022, Tether has seen a further reduction of 20% in commercial paper which we will reflect in the  Q2 2022 report. As Tether’s growth in the market continues to validate the business, we are pleased to share attestations now, and in the future, as part of our ongoing commitment to transparency.”

This time last year, about 3% of the Tether supply was backed by actual cash despite the previous claims by the company that it was actually 100% backed by cash. Since then, Tether was under a lot of pressure to cash and reduce the portion of the commercial paper in the reserves. When the Chinese real estate developers back in 2021, Evergrande and Kaisa entered into a risk of missing a US dollar bond payment, the commercial paper made up $31 billion of the $69 billion reserves.

Tether hasn’t disclosed which companies issued a commercial paper but drew attention to the fact that it represents a shrinking chunk of the reserves. The latest report includes beefed-up language and the disclaimers from MHA accounting and auditing company, that their assessment does account for some turbulent market conditions:

“The valuation of the assets of [Tether and its subsidiaries] is based on normal trading conditions and does not reflect unexpected and extraordinary market conditions, or the case of key custodians or counterparties experiencing substantial illiquidity, which may result in delayed realizable values. No provision for expected credit losses was identified by management at the reporting date.”