Tether, the issuer of USDT, announces that it no longer holds any commercial paper shares in its reserves used to secure its stablecoin. The company is thus taking a new step towards greater transparency, the latter having moreover abandoned commercial paper in favor of US Treasury securities.
Tether abandons commercial papers
Tetherthe company issuing the USDT stablecoinannounced that it had completely abandoned commercial paper to ensure its reserves in favor of US Treasury securities.
The firm thus respects its commitments of last July 27 insofar as it announced then to reduce its share of commercial papers from 3.7 billion dollars to only 200 million at the end of August, before eliminating them definitively “ before the end of October », which is now done.
Issuers of stablecoins must be irreproachable with regard to their reserves, Tether has long faced criticism over the management of its funds used to insure the USDT, particularly against its share of commercial paper.
Commercial papers are commercial paper issued on a short-term basis and not guaranteed by a company, the maturity of which generally does not go beyond 9 months. Mainly used to prevent large companies from having to resort to banks, they are however often the subject of criticism because their origin is not always easy to verify, and this can thus be considered as a lack of transparency.
Tether marks a significant change of direction here, since it still held 65% of commercial paper in May.
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USDT issuer leans towards Treasuries
This strategy was therefore completely abandoned. in favor of US Treasury securities (often referred to as T-bonds), which are issued directly by the US government through the Treasury Department. These bonds, unlike commercial papers, have a much longer validity period (up to 30 years). They also allow their holders to earn interest, twice a year.
Share of commercial papers (in red) and Treasury securities (in yellow) of Tether
Tether, which emits the most capitalized stablecoin in the cryptocurrency market, has picked up the slack in recent months, multiplying the announcements favoring its transparency, even to the point of once again widening the gap with the USDC of Circle, its main competitor. Its future therefore seems to be drawn in this direction, as the press release confirms:
“This announcement is part of Tether’s ongoing efforts to increase its transparency, with investor protection being at the heart of Tether’s reserve management. This is a step towards even greater transparency and trust, not only for Tether, but also for the entire stablecoin industry. »
In addition, Tether announced on August 18 that its reserves would now be audited monthly and no longer quarterly as was the case until then. These audits are now carried out by BDO Italiathe 5th largest audit firm in the world behind the Big Four.
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Source: Tether press release
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