Tether cuts 17% of its commercial paper holdings during the first quarter of 2022


According to the official report published On May 18, Tether, the issuer of the world’s most widely used stablecoin, USDT, cut 17% of its commercial paper holdings and increased US Treasury bills with this reserve amount to back its stablecoin. , USDT. Tether made the drawdown during the first quarter of 2022 and continues with a further 20% drawdown since April 1. The company will highlight this 20% reduction in the second quarter report.

The crypto project took these steps after the USDT stablecoin lost its peg to the dollar. The stablecoin fell to 95 cents on May 12. Additionally, to allay user fears about the catastrophic effects of the recent bloodbath, Tether noted that its holdings were “fully backed” in a blog post on Thursday.

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According to the stablecoin issuer statement, commercial paper holdings have decreased. As a result, holdings decreased from $24 billion to $20 billion in the first quarter. The company also increased its investments in money market funds and US Treasury bills during that time. The firm added 13% to its Treasury Department and raised the investment amount from $35.5 billion to $39 billion.

Tether CTO Paolo Ardoino expressed;

Tether has maintained its stability through multiple black swan events and highly volatile market conditions and even in its darkest days. Tether has never failed to honor a redemption request from any of its verified customers.

USDTUSD_
The price of USDT is currently below 1 US dollar. | Source: TradingView.com USDT/USD price chart

Tether claims it is “fully backed”

He further added;

This latest certification further highlights that Tether is fully supported. And that the composition of its reserves is strong, conservative and liquid.

In February 2021, the New York Attorney General alleged that the company had misrepresented the fiat collateral figure through which the USDT stablecoins are backed. The company settled the legal dispute with AG by paying a fine of $18.5 million. And since then it has been responsible for disclosing its reserve every quarter for the liquidation. As a result, Tether reported its reserve allocation for Q4 2021 last February. According to that report, the company has reduced its commercial paper holdings from $30 billion to $24 billion, down 20%.

Continued USDT bailouts would cause forced sales of trading holdings, possibly leading to indirect contagion in the traditional financial market, Nikolaos Panigirtzoglou, an analyst at JP Morgan Chase & Co., said on Thursday.

Citing Tether outputs, Panigirtzoglou said;

This is not all that is coming out of the crypto markets, as around $5 billion appears to have shifted to USDC and Binance USD.

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Tether has a market cap of over $74 billion at the time of writing. While Tether’s reported assets backing USDT have exceeded $82 billion. To assure users that Tether is as stable as its name sounds, during the last two weeks of market volatility, Tether highlighted that it would “honor all verified customer swaps” for USDT.

Featured image from Pixabay and chart from TradingView.com


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