Tether is reducing its reserve allocation to commercial paper by 21% from around $30.5 billion to $24.16 billion

The issuer of the stablecoin USDT, Tether reduced its commercial paper reserve allocation by more than a fifth from about $30.5 billion to $24.16 billion between September and December last year..

Tether is required by law to disclose its reserves every quarter beginning in February 2021 as part of a $18.5 million court settlement with the New York City Attorney’s Office. The company was accused of falsifying the specific amount of USDT’s fiat backing in 2017 and 2018.

The last certification was carried out by the auditor MHA Caymanbased in the Cayman Islands, and provides a breakdown of Tether reserves as of December 31, 2021.

Tether is reducing its reserve allocation to commercial paper by 21% from around $30.5 billion to $24.16 billion
Tether is reducing its reserve allocation to commercial paper by 21% from around $30.5 billion to $24.16 billion

That’s what the report says “Tether’s consolidated assets exceed its consolidated liabilities,” but the difference is minimal as total assets are $78.67 billion while liabilities are around $78.53 billion.

Tether’s reserve composition has changed significantly from the previous report in late September; Cash and bank deposits fell 42% to $4.187 million, while the money market fund allocation rose 200% to $3 billion and Treasury bills were also up 77.6% to $34.52 billion.

The significant amount of commercial paper backing Tether reserves — which hit 65.39% in May 2021 — drew criticism from observers who questioned the lack of transparency around the paper’s origins and its credibility as an investment.. Over the past year, there have also been concerns that commercial paper holdings could expose Tether to the Evergrande Crisis, although Tether said that was not the case.

Commercial paper is typically issued by large corporations and is used to fund payroll and short-term obligations. It’s called unsecured debt because it’s not usually backed by any type of guarantee.

Tether’s statement said that $13.93 billion of its commercial paper has a 0 to 90 day window, $9.94 billion has a 91 to 180 day window, and $823 million has a 181 to 180 day window 365 days lie.. Any commercial paper with a maturity greater than 270 days (nine months) must be registered with the United States Securities and Exchange Commission (SEC).

According to Coingecko USDT’s market cap at the time of writing stands at $79.47 billion, while its closest competitor, USD Coin (USDC), sits at around $52.7 billion.

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