Tether reduces commercial paper to zero

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On October 12, stablecoin issuer Tether announced that it has reduced its commercial paper holdings to zero, replacing these holdings with US Treasury bills (T-bills).

Tether said converting its commercial paper holdings to treasury bills was part of its “ongoing efforts to increase transparency” and “demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market”.

Tether, whose USDT is the most used and largest stablecoin by market capitalization, had previously been subject to quite a lot of scrutiny due to the fact that more than one-third of its capital reserves consisted of commercial paper (i.e. unsecured short-term commercial loans). Further, the identity of the issuer of the commercial paper was not clear. A 2021 article in Bloomberg claimed that Tether’s reserves included “billions of dollars of short-term loans to large [unknown] Chinese companies”.

We wrote about this, and what would happen to cryptocurrencies if Tether collapsed, in a previous article.