Tether cuts commercial paper to 3.7 billion and denies Chinese ties

Tether reserves have been debated for some time now. In June this year, Tether was accused that Chinese or Asian commercial papers backed 85% of its commercial paper portfolio. Additionally, the newspapers were apparently trading at a 30% discount. However, Tether denied these claims via an official blog post in June.

They stated,

“…more than 47% of total USD₮ reserves are now US Treasuries and this commercial paper represents less than 25% of USD₮ support.”

Anyway, Tether has now announced that it has reduced its commercial paper holdings from 30 billion in July 2021 to a meager 3.7 billion. The company also reiterated that it does not hold any Chinese commercial paper.

Additionally, the largest stablecoin issuer plans to further reduce its commercial paper holdings to 200 million by the end of August 2022. And by the end of October or early November, they plan to have none.

Nevertheless, the company assured its investors that the company continues to have a diversified portfolio. It also mentions that it limits exposure to individual issuers or assets.

How did Tether reduce its commercial paper holdings?

In the June blog, the company revealed that it had reduced its commercial paper holdings to 11 billion, from 20 billion at the end of the first quarter of 2022. It planned to reduce this number to 8.4 billion by June. . At first glance, Tether seems to have outdone itself.

In June, CTO Paolo Ardoino said all expiring commercial papers were turned into US Treasury bonds. He said the company will continue to do so until the commercial paper exposure is reduced to zero.

Tether’s reserves have constantly been a cause of controversy. Also, unlike the Hub’s USDC, Tether hasn’t been audited very regularly. Additionally, the company is not very transparent with its investments and reserves. Many have thus predicted that the USDC will soon overthrow the USDT as the first stablecoin in the market.

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