For the first time since the launch of the USDT stablecoin in 2014, Tether has disclosed detailed information about the assets that provide the token emission. About 76% of USDT is backed by traditional currencies and liabilities in them.
As of March 31, 2021, Tether holds 76% of its reserves in cash and cash equivalents, which includes short-term deposits and promissory notes. Of this figure, the largest share falls on bills – 65%. Fiduciary deposits accounted for 24% of this category, repo transactions – 3.60%, treasury bills – about 3%. Cash formed a very small share – only 3.87%.
When asked why cash constitutes a “tiny” portion of the total reserves, Tether General Counsel Stuart Hoegner replied that it would be wrong to focus only on cash. According to Stewart, “if the reserves are not represented in fiat currency, this does not mean a lack of liquidity.” As for the promissory notes, Högner declined to provide information on counterparties.
The rest of the reserves are divided into three categories. These are secured loans, none of which are provided to affiliates – 12.55% of the total reserves. Corporate bonds, funds and precious metals accounted for 10%, while other investments, including cryptocurrencies, accounted for 1.64%. Högner explained that the secured loans are provided by Tether itself, and the latest indicator on digital assets refers exclusively to Bitcoin.
“Bitcoin has become an important component of the financial reporting of many corporations operating in the public and private market. Companies are investing in bitcoin to diversify their risks. Therefore, Tether also applies this practice and holds bitcoins, ”said Högner.
Tether originally claimed that each USDT stablecoin is backed by US dollars at a 1: 1 ratio. In March 2019, Tether also announced that USDT was fully backed by the company’s reserves. But the company presented such detailed details for the first time. This came a few months after the New York Attorney’s Office (NYAG) settled a legal dispute with Bitfinex and Tether, ordering them to pay a fine of $ 18.5 million and provide quarterly reports on their activities.
Tether decided to make information about its reserves available not only to the prosecutor’s office, but also to the public. This will provide a high level of transparency and help set certain standards in the cryptocurrency industry, Högner said.
The use of USDT has skyrocketed in recent months. In April, its market capitalization exceeded $ 50 billion, and now it is already approaching $ 58 billion.
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