Fashion
By scaling back its exposure to assets like commercial paper, the company improves its credibility.
The controversial Tether Holdings completely removed the commercial paper from its reserves. The world’s largest stablecoin issuer reported in a blog post that it has replaced those positions with US government bonds, the majority of its reserves now consisting of Treasury bills, according to the company.
The stablecoin issuer has long been embroiled in controversy over the status of the reserves used to back the supply of the stablecoin USDT, of which Tether is the issuer. issues. The world’s most traded cryptocurrency has been repeatedly criticized by regulators for not making it clear enough how the reserves backing stablecoin are composed.
Commercial paper is unsecured, short-term debt issued by a company and is considered less secure and liquid than Treasury bills. Tether previously announced plans to reduce these holdings and has been doing so gradually this year.
Unlike commercial paper, T-bills are short-term government debt instruments. According to the largest US bank, JP Morgan, Tether and its stablecoin competitors’ share of the T-bill market exceeds that of Warren Buffett’s Berkshire Hathaway holding company.
According to the blog post, Tether believes removing commercial paper from its reserves will boost confidence in the stablecoin industry. The TerraUSD stablecoin price debacle and the collapse of the Terra Luna ecosystem have taken a second toll on confidence in cryptocurrencies this year.
