Tether, the creators and the company behind the world’s largest stablecoin with a market capitalization of $79.4 billion, USDT, released its quarterly assurance report which revealed that its commercial paper and certificate of deposit holdings currently stand at $24.2 billion, which represents a 21% decline when compared to the previous quarter in which the holdings stood at $30.5 billion.
The assurance report was done by MHA Cayman, a firm of independent auditors, accountants and business advisors based in the Cayman Islands that specializes in the audit of investment funds and digital assets. The breakdown shows the firm’s reserves as of 31st of December 2021.
This assurance report is part of a legal requirement by the stablecoin issuer to disclose its reserves every quarter as part of its $18.5 million court settlement with the Office of the New York Attorney General in February 2021. The firm was alleged to have misrepresented the specific amount of fiat backing USDT in 2017 and 2018.
What you should know
According to the report, Tether’s consolidated total assets, which stands at $78.7 billion exceed that of its consolidated total liabilities which stands at $78.5 billion but the difference between them is minimal ($137.3 million).
Compared to the last report released, its cash and bank deposits dropping 42% to currently stand at $4.187 billion. Its allocation to money market funds increased 200% to stand at $3 billion while its treasury bills also grew 77.6% to now stand at $34.52 billion.
The reason why the decline in its commercial paper holdings is significant is because as of May 2021, 65.39% of Tether’s reserves was made of commercial papers and this sparked criticism against the firm, with many in the cryptocurrency space questioning the lack of transparency regarding the origins of the paper and its credibility as an investment.
There were also concerns last year that the firm may be exposed to the Evergrande crisis via commercial paper holdings, although Tether said this was not the case. Commercial paper is often issued by large corporations to raise funds and is used for financing payroll and short term-liabilities. It is referred to as unsecured debt as it is usually not backed by any form of collateral.
The report also gives the breakdown of the maturity of the commercial papers. It shows that $13.4 billion worth of its commercial paper has a maturation window of 0-90 days, $9.95 billion has 91-180 days and $823.8 million has between 181 and 365 days.
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