Tether Switches Auditor

The issuer of the world’s largest stablecoin has hired a new auditing company and will publish reserve updates on a monthly basis.

Tether Holdings is partnering BDO Italia to conduct regular reviews and attestations of its foreign exchange reserves and will publish an attestation of its reserves for the second quarter in the coming days, it said in a statement late Thursday.

BDO Italia is replacing previous auditor Cayman-based MHA Cayman.

The reports that list the assets that make up stablecoins’ reserves are closely followed by crypto investors. However, they are not certified audits, as they do not require verification of the underlying data confirming whether an issuer’s information about its reserves is materially accurate.

Tether, the issuer of the world’s largest stablecoin by market capitalization, USDT, has long been embroiled in controversy over the status of its reserves, which are used to back the supply of USDT.

In February 2021, Tether was banned from operating in New York state. As part of an $18.5 million settlement with the New York State Attorney General’s Office, Tether is required to disclose its reserves each quarter. Last October, the company was fined $41 million by the Commodity Futures Trading Commission (CFTC) for making untrue and misleading statements about the reserves that support the stablecoin.

Tether has previously faced questions about its holding of commercial papers in its reserves in particular.

According to the company, this portion has been significantly reduced from $30 billion in previous years to $3.7 billion in July with plans to remove this asset class altogether. Until now, Tether has submitted its attestation reports quarterly and with a large delay.

Stablecoin competitors such as Circle and Paxos submit monthly reports on their reserves. Both have limited themselves to holding only government bonds or bank deposits.

In the wake of the collapse of the Terra Luna ecosystem, USDT’s market capitalization has fallen from $83 billion to about $67 billion this year. Circle’s USDC stablecoin, which is also pegged to the U.S. dollar, gained some of those outflows.