Tether Cuts Commercial Paper Reserve by 17% for Q1 2022

UTC by Tolu Ajiboye · 3 min read
Tether Cuts Commercial Paper Reserve by 17% for Q1 2022
Photo: Depositphotos

Tether announced that it slashed its commercial paper holdings over the first quarter to $20 billion, plans an additional 20% reduction.

Tether recently reported that it reduced its commercial paper holdings by 17% in the first quarter of 2022 to improve the quality of its reserves. The USD stablecoin issuer also increased its US Treasury bills portfolio over the same period.

In a blogpost, Tether expounded on its commercial paper reduction, now at $20 billion from $24 billion. The stablecoin issuer assured its community that the reserves are “fully backed,” and also “strong, conservative, and liquid”. Tether did this to allay any fears users might have, especially after USDT briefly traded under $0.99 on two major exchanges last week.

Tether also stated that the reduction will continue with an additional 20% slash to reflect in the next quarterly report. However, the USDT issuer increased investments in money market funds and T-bills by 13% over the quarter ended March 31st. The figure now sits at $39 billion from approximately $34.5 billion.

More on The Tether Commercial Paper Report

A significant chunk of Tether’s $20 billion commercial paper haul comprises A-1 and A-2 paper, which qualify as investment grade. However, the report didn’t specify the rating agencies involved. It also did not provide a geographic location for the commercial paper issuers.

According to Bloomberg, last October, most of Tether’s commercial paper saw issuance by big Chinese companies. This has led some analysts to question the quality of the stablecoin issuer’s reserves. So far, Tether has not disclosed the names of its alleged Chinese collaborators.

In its blogpost, Tether chief technical officer Paolo Ardoino touted the qualities of the USDT issuer. This comes across as an affirmation of Tether’s capabilities and proficiency and douses any misgivings about the firm. According to Ardoino:

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

Following an $18.5 million settlement with the Office of the New York Attorney General in 2021, Tether has to disclose its reserves every quarter. In February this year, the company reported a slash in reserves allocation to commercial paper in the fourth quarter of 2021. The report showed a 20% decrease as the figure went from around $30 billion to $24 billion.

Tether Crypto Educational Program in Switzerland

In other news, Tether recently launched a crypto and blockchain education program in Switzerland’s southern city of Lugano. The initiative is a collaborative effort between Tether and the city’s local government, which recently made USDT legal tender. Furthermore, other digital currencies that are currently also ‘de facto’ legal tender in Lugano include Bitcoin (BTC) and LVGA tokens.

Information on the upcoming Tether educational scheme, dubbed the Plan ₿ Summer School, says it will start in July and run for two weeks. Speaking on the development, Ardoino said:

“It is essential that educational institutions are put into place to help better inform not only traders and investors but future business owners.”

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