By
Godfrey Benjamin
April 15th, 2024
As of July 1 this year, Tether Holdings said its commercial paper exposure was approximately $3.5 billion, and it expressed its plans to cut this to 0 before year-end.
Tether Holdings Limited, the blockchain fintech giant that is in charge of the USDT stablecoin has announced it has reduced its commercial paper holdings to zero and embraced T-Bills. As revealed by the company, the shift from Commercial Papers (CP) is a sign it is working hard to maintain the transparency that has characterized its business for the past few years.
The company revealed that it has invested in United States Treasury Bills (T-Bills) as it wants a more trusted, stablecoin and easily liquidatable asset to hold its reserves.
“Tether announced that it has eliminated commercial paper from its reserves, replacing these investments with U.S. Treasury Bills (T-Bills),” the Press Release reads, “This announcement comes as part of Tether’s ongoing efforts to increase transparency, with investor protection at the core of the management of Tethers’ reserves. Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market. This is a step towards even greater transparency and trust, not only for Tether but for the entire stablecoin industry.”
As a company that is unduly tagged as manipulative, Tether has taken extra efforts to show how legitimate its innovations with USDT are, and it publishes periodic attestations of its stablecoin reserves. It is these attestations that have shown how the company has taken gradual efforts to reduce its commercial paper exposure.
As of July 1 this year, Tether Holdings said its commercial paper exposure was approximately $3.5 billion, and it expressed its plans to cut this to 0 before year-end. Over the course of the past few months, the company had taken targeted efforts to cut the exposure which came in at $50 million by September 30.
Tether to Chart a New Course With US T-Bills
Tether (USDT) is by far the largest stablecoin in the crypto economy with a market capitalization of over $68.4 billion. The company will always need to show proof that its reserves are intact as the stakeholders in the ecosystem are now very sensitive to stablecoin-linked calamities, following the collapse of TerraUSD (UST).
That the company chose to chart a new course with US T-Bills is a strategic move at this time considering the fact that the US Federal Reserve through the Federal Open Market Committee (FOMC) has continued to raise interest rates which typically benefits the company in monetary terms.
The company’s new course with the shift from CP to T-Bills was further solidified as it landed BDO Italia, one of the top accounting firms in the world to help in the preparation of its attestation report, as it also looks forward to a complete audit of its reserve in the near future. At a time when investments in digital currencies are growing, the role of USDT cannot be downplayed and in order to play this role as required, Tether needs to show stakeholders that it can be trusted on all fronts.