as per official report published On May 18, Tether, the issuer of the world’s most used stablecoin, USDT, has cut its commercial paper holdings by 17% in order to back its stablecoin, USDT, and the United States with this reserve. Treasury bills increased. Tether decreased in Q1 2022 and continues to decline further by 20% since April 1. The firm will highlight this 20% shortfall in the Q2 report.
The crypto project took these steps after the USDT stablecoin lost its dollar peg. The stablecoin fell to 95 cents on May 12. Additionally, to allay users’ fears about the devastating effects of the recent bloodbath, Tether noted that its reserves were “fully supported” in a blog post on Thursday.
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According to a statement from the stablecoin issuer, it has reduced its commercial paper holdings. As a result, holdings declined from $24 billion to $20 billion in the first quarter. Also, the company increased its investments in market money funds and US Treasury bills during that time. The firm has added 13% to its Treasury department and increased the investment amount from $35.5 billion to $39 billion.
Tether’s Chief Technical Officer, Paolo Ardoino expressed;
Tether has maintained its stability through several Black Swan events and highly volatile market conditions and even during its darkest days. Tether has not once failed to honor redemption requests from any of its verified customers.
Tether Confirms It’s “Fully Supported”
He further added;
This latest verification further suggests that Tether is fully supported. And that the composition of its reserves is strong, conservative and fluid.
In February 2021, the Attorney General of New York alleged that the firm had misrepresented the figures for the fiat collateral through which the stablecoin USDT is backed. The company settled a legal dispute with AG by paying a fine of $18.5 million. and is liable to disclose its reserves for settlement every quarter since then. As a result, Tether reported its reserve allocation for Q4 2021 last February. According to that report, the company reduced its commercial paper holdings from $30 billion to $24 billion, a 20% drop.
JPMorgan Chase & Co analyst Nikolaos Panigirtzoglu said on Thursday that continued redemptions from USDT could lead to forced selling of commercial holdings, potentially leading to a transition to traditional financial markets.
Referring to the Tether outflow, Panigirtzoglu said;
It is not exiting all crypto markets as almost $5 billion has been moved to USDC and Binance USD.
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At the time of writing, Tether has a market capitalization of over $74 billion. While the purported assets of Tether backing USDT have exceeded $82 billion. In a bid to reassure users that Tether is stable as its name suggests, during the market volatility over the past two weeks, Tether highlighted that it is “for all redemptions from verified customers” for USDT. will respect”.
Featured image from Pixabay and chart from TradingView.com