Stablecoin issuer Tether has nearly completely slashed its commercial paper holdings, with less than $50 million worth of commercial paper units as of Sept. 30, 2022. Tether chief technology officer Paolo Ardoino made the announcement in an Oct. 3 tweet, adding also that Tether’s United States Treasury bills increased to 58.1% of its total portfolio, up 25.1% from its June 30 figure of 43.5%.
[Lindrea, B. Tether commercial paper exposure now under $50M — CTO. (Accessed October 4, 2022)].
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“According to the last official report on June 30, about 43.5% of Tether’s assets — roughly $28.8 billion — were held in U.S. Treasury bills, while less than 25% — around $8.4 billion — represented its exposure to commercial papers” [Nwobodo, C. Tether reduces commercial paper exposure to below $50M, Treasury bills rise to 58.1% of reserve. (Accessed October 4, 2022)].
“Commercial papers are short-term debt instruments issued by companies, which are often used to finance various business operations, while treasury bills are claimed to be more stable than commercial papers as they offer “zero default risk” since investors are guaranteed to at least recoup the purchase price” [Lindrea, supra].
By way of reminder, in mid-August Paolo Ardoino tweeted: “that Tether has plans to continue to decrease its commercial paper holdings to $200 million by the end of August and zero them out by the following October” [Fortis, S. Independent Tether attestation reveals 58% decrease in commercial paper holdings. (Accessed October 4, 2022); see also, Nagoda, K. Tether Keeping Promise - BDO Italia Attestation Shows 58% Drop in Commercial Paper Exposure and More. (Accessed October 4, 2022)].
As promised, Tether will once again demonstrate a commitment to transparency in our next quarterly attestation,’ Tether explained in a note sent to Bitcoin.com News on Monday. ‘Portfolio updates to look out for include a reduction in commercial papers, now making up less than $50M of its reserves and the holding of 58.1% of its assets in U.S. Treasury bills.’
[Graham, A. Tether CTO Says US Treasury Notes Account for More Than 58% of USDT’s Reserves. (Accessed October 4, 2022)].
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The stablecoin issuer has also been seeking to increase transparency into its dollar reserves and backing. In July, it appointed European accounting firm BDO Italia as a new auditor to independently review its stablecoin reserves in a bid to improve transparency and more regularly disclose audit and attestation reports.
[Lindrea, supra].
“According to Ardonia, it will usually take about 45 days for the official report to be reflected; however, the auditing team is working to reduce the timeline. CryptoSlate reached out to Tether and confirmed that the update will be available in its next quarterly report” [Nwobodo, supra].
“Tether’s plan to slash its entire commercial paper holdings by the end of 2022 is well underway, with the firm cutting down its reserves from 20 billion units as of Q1 2022 to 8.4 billion units as of Q2 2022” [Lindrea, supra].
Tether’s entire valuation equates to 7.044% of the $966 billion crypto economy. Moreover, tether’s trade volume on October 3 is more than half of the crypto economy’s aggregate trade volume worldwide. During the last 24 hours, the entire crypto economy recorded $48.43 billion in global trade volume, while USDT accounts for $28.63 billion of the trades. 64.53% of BTC’s share of trades are paired with tether (USDT) today, and USDT accounts for 34.27% of ethereum (ETH) swaps on October 3.
[Redman, J. Tether CTO Says US Treasury Notes Account for More Than 58% of USDT’s Reserves. (Accessed October 4, 2022)].
While maintaining such an important role in the cryptosphere, it is imperative that Tether remain vigilant in its efforts to demonstrate transparency. To that end, it is helpful that Tether posts a daily update on its reserves on its transparency page. As of October 4, 2022 @ 07:22 ET, the tether transparency page discloses:
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