By Shelly Melancon (Switzerland)
Tether, a famous stablecoin issuer, made a post on Twitter to clarify issues about its reserves. The post dated 27th July denied all claims that its reserve comprised 85% Asian or Chinese commercial papers (CP).
The report stated that:
“The company’s portfolio does not contain any Chinese CP. However, our total CP exposure has dropped to about 3.7 billion from 30 billion last year. We have plans to reduce it further to 200 million by August and then zero by October/November this year.”
Meanwhile, this means the stablecoin giant might have no commercial paper holdings by November. According to Tether, critics are spreading this rumor to create panic among users and to generate profits.
Reports Claim Tether’s Reserve Contained Short-term Loans To Chinese Firms
In July, Tether had laid to rest rumors concerning its commercial papers. This was to prevent such rumors from further weakening the crypto market.
According to the company, Tether will continue to ensure it diversifies its portfolio. Also, it would limit the exposure of its portfolio to individual assets or issuers.
Furthermore, Tether’s continuous plan to reduce its commercial paper is part of its commitment to investors.
However, Bloomberg reported last year about an investigation on Tether. According to the report, it claimed the company’s reserves contained short-term loans.
Also, these loans were in connection to large Chinese firms. Besides, there has been a decline in the property market in China.
Hence, the investigation raised issues over the liquidity of those assets linked to China. Alex Welch, an executive at Tether, told Bloomberg that the firm usually reveals its CP reserves.
47% Of USDT Reserves Comprises Of US Treasuries
Welch added that Tether was conservative when it had large CP reserves, and several agencies rated it A2. Hence, the company has been working to reduce its CP holdings.
Earlier this month, the stablecoin issuer stated that more than 47% of its USDT reserves comprise US Treasuries. Also, it said CP only accounted for just 25% of the reserve backing the USDT.
After the latest Celsius bankruptcy issues, rumors spread that it would affect the USDT. However, a news report states that regulators are investing in Tether.
This was after Tether allegedly recovered a loan of over $840 million from Celsius. Meanwhile, Tether said it is ready to dominate the stablecoin sector despite the rumors and criticisms.
As of the time of publication, the USDT remains pegged to the USD. According to CoinGecko, it has a market capitalization of about $65 billion.
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