Tether reduces its reserve allocation to commercial paper by 21%, from about $30.5 billion to $24.16 billion

The issuer of the stablecoin USDT, Tether reduced its reserve allocation to commercial paper by more than a fifth between September and December last year, from about $30.5 billion to $24.16 billion..

Tether is legally required to disclose its reserves each quarter as part of an $18.5 million court settlement with the New York Attorney General’s Office beginning in February 2021.. The firm was alleged to have falsified the specific amount of fiat backing USDT in 2017 and 2018.

The last attestation was carried out by the accountants MHA Caymanbased in the Cayman Islands, and provides a breakdown of Tether reserves as of December 31, 2021.

The report states that “Tether’s consolidated assets exceed its consolidated liabilities”, however, the difference is minimal, with total assets amounting to $78.67 billion, while liabilities are around $78.53 billion.

The composition of Tether’s reserves changed significantly from its previous report in late September; cash and bank deposits fell 42% to $4.187m, while its allocation to money market funds jumped 200% to $3bn, and its treasury bills also grew 77.6% to $34.52bn.

The significant amount of commercial paper backing Tether’s reserves – which reached 65.39% as of May 2021 – sparked criticism from observers who have questioned the lack of transparency regarding the paper’s origins and its credibility as an investment.. There were also concerns last year that Tether could be exposed to the Evergrande crisis through commercial paper holdings, although Tether said that was not the case.

Commercial paper is usually issued by large companies and is used to finance payroll and short-term obligations.. It is called unsecured debt, since it is not usually backed by any type of collateral.

Tether’s statement states that $13.93 billion of its commercial paper has a maturity window of 0-90 days, $9.94 billion is between 91-180 days, and $823 million is between 181-365 days.. Any commercial paper with a maturity period of more than 270 days (nine months) must register with the United States Securities and Exchange Commission (SEC).

According to Coingecko’s data, USDT’s market capitalization stands at $79.47 billion at the time of writing, while its biggest competitor USD Coin (USDC) hovers around $52.7 billion.

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