“The USDT issuer has faced criticisms for its exposure to commercial paper and, specifically, its alleged holdings of Chinese commercial paper” [Bourgi, S. Tether reduces commercial paper exposure to zero, replaces investments with T-Bills. (Accessed October 15, 2022). “As of July 1 this year, Tether Holdings said its commercial paper exposure was approximately $3.5 billion, and it expressed its plans to cut this to 0 before year-end. Over the course of the past few months, the company had taken targeted efforts to cut the exposure which came in at $50 million by September 30” [Godfrey, B. Tether Reduces Its Commercial Paper Exposure to Zero as It Embraces US T-Bills. (Accessed October 15, 2022)].
On October 13, 2022, “Tether, the issuer of USDT stablecoin, said it now holds zero commercial debt after months of gradually reducing its exposure to commercial paper. Tether’s official announcement noted that the company’s commercial debt holdings were replaced with T-Bills. This makes Treasury bills the most significant investment in Tether’s reserve portfolio” [Fredrick, W. Tether Reduces Commercial Paper Holdings to Zero from $30 Billion. (Accessed October 15, 2022)].
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Tether’s announcement concludes with some self serving rhetoric:
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So far, it appears that this move by Tether has met with the approval of Crypto Twitter. For example:
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Tether (USDT) is by far the largest stablecoin in the crypto economy with a market capitalization of over $68.4 billion. The company will always need to show proof that its reserves are intact as the stakeholders in the ecosystem are now very sensitive to stablecoin-linked calamities, following the collapse of TerraUSD (UST). That the company chose to chart a new course with US T-Bills is a strategic move at this time considering the fact that the US Federal Reserve through the Federal Open Market Committee (FOMC) has continued to raise interest rates which typically benefits the company in monetary terms. The company’s new course with the shift from CP to T-Bills was further solidified as it landed BDO Italia, one of the top accounting firms in the world to help in the preparation of its attestation report, as it also looks forward to a complete audit of its reserve in the near future.
[Godfrey, supra].
“The stablecoin issuer said it planned to increase its reporting frequency from quarterly to monthly” [Bourgi, supra].
