What is the backing of USDT? Tether reveals composition of its reserves

Charlie Taylor

Tether reveals the composition of its funds for the first time since its launch in 2014 and surprises the cryptocurrency market. The issuing company of stablecoin Dollar Tether (USDT), for the first time since its launch in 2014, revealed the composition of its reserves. revelation, shown by The Block on Thursday (13), was dated March 31, 2022. It shows that Tether Limited, the company behind the token, held almost 76% of its cash reserves and equivalent assets cash and other short-term deposits and promissory notes. Promissory notes, in fact, made up the bulk of the cash-equivalent asset category, making up 65%. Fiduciary deposits represented 24% of the category, reverse committed notes 3.60%, treasury notes around 3% and real money only 3.87%.

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graphical tether compositionWhen asked why real money made up only a small part of total reserves, Tether General Counsel Stuart Hoegner told The Block that it is "misleading to focus exclusively on money" within the category of money and its equivalents. "Readers should not confuse items that are not in 'real money' with a lack of liquidity," he said. Regarding the promissory notes, Hoegner denied sharing counterparty names "according to standard business practice." The other 25% The rest of the company's reserves are divided into three categories: Securities lending – none of which to affiliated entities – forming 12.55% of total reserves; Corporate bonds, funds and precious metals, forming almost 10%; Other investments, including digital tokens, which together are 1.64%. Secured loans are issued by Tether, Hoegner told The Block. As for the securities, funds and precious metals category, he declined to share further details, and as for digital tokens, Hoegner said that he refers exclusively to bitcoin. “We have seen bitcoin become an important component of the balance sheets of several major corporations in the United States. public and private markets. This serves to diversify the risk, ”Hoegner told The Block. "Tether's use of BTC and other forms of investment is in line with this practice." Tether's market capitalization on March 31 was $ 42.35 billion, according to data compiled by The Block.

Tether's path to transparency

When Tether was launched, it originally stated that each tether (USDT) was supported 1: 1 with US dollars. In March 2019, she updated her website to state that "all Tether tokens are 100% backed by Tether reserves." Subsequently, he created a transparency page describing the company's assets and liabilities, measured in three currencies and gold (Tether also created a gold stablecoin). But until now, it had not done a detailed analysis of these reserves. The collapse of Tether's reserves occurred almost three months after the company made a deal with the New York attorney general's office with a $ 18.5 fine. million. "Tether proposed the continued publication of the reserve division as part of our settlement agreement with the New York Attorney General's Office, and we commit to making this information available to both the Attorney General's Office and the public." said Hoegner. “Today's publication reflects our continued dedication to transparency and setting standards in our industry.” According to Coingolive, Tether Dollar reserves today total 58.19 billion, up 0.72% in the past 24 hours. due to the recent fall of bitcoin. Last week, the adjusted volume of the Tether network surpassed the $ 1 trillion dollar mark on an annual basis for the first time. The volume of on-chain transactions is any transfer of value within a blockchain network, including purchase, resale and remittances.

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