Tether seems to be taking steps to become more trustworthy. Stablecoin issuer Tether (USDT) has kept its word by reducing its exposure to riskier assets like commercial paper.
As of October 12, 2022, the company did not hold any commercial paper, with treasury bills making up the bulk of its reserves. The company announced this in a blog post on October 13, 2022.
Tether and its rivals hold more Treasuries than Berkshire Hathaway
This latest announcement follows gradual reductions in commercial paper holdings, which are short-term debt instruments issued by companies to raise funds for short-term liabilities like inventory and payroll. In contrast, treasury bills are short-term debt securities that governments sell to corporations to raise funds for large civil projects such as building roads and schools. According to Wall Street Bank, JPMorgan Chase, Tether and its stable rivals’ Treasuries market share exceeds that of Warren Buffet’s investment firm Berkshire Hathaway.
On July 1, 2022, the company announced that it had reduced its commercial paper exposure to $3.5 billion, and on September 13, it announced that its exposure to the short-term debt instrument had fallen to less than $50 million.
According to the blog post, Tether believes that eliminating commercial paper helps build trust in the stablecoin industry, which has recently come under scrutiny following the collapse of another stablecoin, TerraUSD, in May 2022. TerraUSD relied on an arbitrage mechanism with sister coin LUNA, rather than reserves, to maintain its peg to the US dollar.
VanEck Strategy Advisor Gabor Gurbacs congratulated the company and its Chief Technology Officer Paolo Ardoino on the company’s latest achievement:
In addition to Treasury bills, Tether’s reserves are partly backed by a portfolio of short-term fixed income securities that Gurbacs called “less risky to me than most bank balance sheets.”
Tether recently celebrated its eighth birthday.
CTO brags about company’s accomplishments
Ardoino vaunted that the company was the only one among other stablecoin issuers to be able to honor $7 billion in withdrawals within 48 hours. He also said that USDT is booming in countries with large populations without access to banking services. In Mexico, Tether’s peso-backed stablecoin is now used to pay for yoga classes, art and drinks.
Ardoino too enthusiasm expressed that the Bitcoin-focused Lugano Plan B forum conference was approaching. The event features a line-up of big names in the bitcoin space, including Blockstream’s Adam Back, computer scientist Nick Szabo and bitcoin expert Jimmy Song.
Tether has partnered with the city of Lugano to help it adopt Bitcoin at all levels of the city, from merchants accepting bitcoin payments to the city taking it for tax payments.
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