The official report Published on May 18, Tether, the issuer of the world’s most used stablecoin, USDT, has cut 17% of its commercial paper holdings and increased United States Treasury bills with this reserve amount to back its stablecoin, USDT. Tether saw a 20% drop in its Q1 2022 holdings and is continuing to see a further 22% decline from April 1. In the Q2 report, Tether will emphasize this 20% decrease.
These steps were taken by the crypto project after USDT’s dollar peg was lost. On May 12, the stablecoin fell to 95 cents. In addition, to assuage users’ fears over the catastrophic effects of the recent bloodbath, Tether noted that its reserves were “fully-backed” in a blog post on Thursday.
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The stablecoin issuer stated that it had decreased its commercial paper holdings. The holdings dropped from $24billion to $20billion in the first quarter. In addition, investments were increased in U.S. Treasury Bills and Market Money Funds. The company has increased its Treasury Department by 13% and raised the amount of investments from $35.5 billion up to $39 billion.
Paolo Ardoino was the Chief Technical Officer at Tether.
Tether has remained stable through many black swan events as well volatile market conditions. It even survived its worst days. Tether has honored every redemption request of any verified customer and never failed to do so.
Tether Affirms It Is “Fully Backed”
He also added
Tether’s latest attestation confirms that it is fully supported. The composition of Tether’s reserves is solid, stable, and liquid.
New York Attorney general claimed the company had incorrectly represented the amount of fiat collateral with which USDT stabilizecoins were backed. A.G. imposed a $18.5million fine on the company to settle their legal dispute. The company was then liable for disclosing its reserve each quarter in accordance with the settlement. Tether therefore reported last February its Q4 2021 reserve allocation. This report shows that the company’s commercial paper holdings have decreased from $30 billion up to $24 Billion, a decrease of 20%.
Continued redemptions from USDT would cause forced sales of commercial holdings, possibly leading to spillover in contagion in the traditional financial market, said Nikolaos Panigirtzoglou, an JP Morgan Chase & Co. analyst on Thursday.
Panigirtzoglou cited the Tether outflows;
However, this is not the end of crypto markets. Around $5 billion has shifted to USDC/Binance USD.
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Tether currently has more than $74 Billion in market capital at the time this is written. While Tether’s reported assets backing USDT have exceeded $82 billion. To assure users that Tether is stable as its name sounds, over the last two weeks of market volatility, Tether highlighted that it would “honor all redemptions from verified customers” for USDT.
Featured image by Pixabay, chart from TradingView.com