New audit for Tether
The USDT stablecoin issuing company, Tether Limitedhas just released its latest audit.
The latter, made by the independent accounting firm MHA Caymaninforms us that Tether reserves are compliant and that they ensure 100% of the USDT available on the market. The study covers the period from October 1 to December 31, 2021a direct follow-up to the previous quarterly report.
Following numerous legal setbacks, in particular Tether’s inability to prove that its reserves were sufficient to ensure the stability of its stablecoin, the company was forced to settle a $18.5 million fine alongside Bitfinex in February 2021 as well as the obligation to publish a quarterly report on its reserves.
In theory, each unit of stablecoin issued to the market must be guaranteed by its equivalent in fiat currency (dollar, euro, yen, etc.) For example, a USDT must always be worth 1 dollar. This may fluctuate very slightly depending on the market, but the impact will always be less. Thus, companies issuing stablecoins must be able to prove that they have the necessary funds to insure them.
? Find our sheet dedicated to the stablecoin USDT
The report in detail
Compared to the previous quarter, Tether has chosen to reduce its share of commercial paper by 21%. Thus, its overall value goes from 30.5 billion dollars initially to just over 24 billion. Commercial papers are short-term commercial papers, generally used by companies to avoid making loans from banks.
Tether’s strategy of holding the majority of its funds in the form of commercial paper had been widely criticized last year, because the latter can sometimes hide a lack of transparency, particularly regarding their origin. Last May, more than 65% of reserves of Tether were made up of treasury bills, so this significant change in direction should be appreciated.
In addition, where Tether made the choice to acquire cash bonds valid between 3 and 12 months, the company preferred to change strategy and now has a majority of bonds with a maturity of less than 3 months.
As these bonds are generally not backed by collateral, they may constitute some form of long-term risk. As such, treasury bills with a maturity of more than 270 days must also be registered with the United States Securities and Exchange Commission (SEC).
Its reserve of monetary funds has literally tripled, from $1 billion to $3 billion. However, the biggest increase is in treasury bills, which now stand at $34.5 billion, up from $19.4 billion. Treasury bills are debt securities issued by a State and repayable at maturity.
Currently, Tether’s USDT is at the 3rd place on the cryptocurrency podium in terms of market capitalization, i.e. 2 places ahead of the USDC, a stablecoin issued by the company Circle and also backed by the dollar.
? To go further: The State of Wyoming wants to launch its own stablecoin
Source: Tether
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