Tether is now lowering its holdings of such securities and boosting its exposure to US Treasury bonds
The collapse of Terra and its UST stablecoin, which occurred just over a week ago, sent the stablecoin community into a frenzy. Some of them, such as USDC and BUSD, were trading at a premium to the market and were feeling fairly good. Others, such as USDN, DEI, and USDT, have faced significant pressure as a result of a lack of user trust.
Tether’s USDT, as one of the most popular stablecoins, appears to be weathering the storm and acting as a safe harbor for investors’ assets. However, due of its run-ins with the US SEC and an overstated, it appears, quantity of reserves, the public still has reservations about USDT.
The large number of commercial documents in Tether Holdings’ reserves announced in December 2021 has significantly exacerbated the problem. Commercial papers have the disadvantage of being less liquid, making them more difficult to get rid of in a financial crisis.
Major experts have repeatedly cautioned Tether about this, and its CTO has concurred, noting that the company is lowering its holdings of such securities and boosting its exposure to US Treasury bonds.
Finally, Tether issued its consolidated reserves report on May 19, which shows a 17% drop in commercial paper from $24.2 billion to $19.9 billion quarter over quarter.
The report also shows that the group’s investments in money market and U.S. Treasury notes increased by more than 13%, from $34.5 billion to $39.2 billion.
Tether’s CTO, Paolo Ardoino, also commented on the findings, stating that the last week has demonstrated the firm’s strength and durability. Tether is fully financed, with a solid, conservative, and liquid reserve composition.
Today, Tether’s petition to the state of New York’s supreme court for permission to exclude the public from viewing documents that describe the composition of the firm’s reserves over the previous few years was denied.
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