Tether Eliminates All Commercial Paper Holdings to Zero

Tether Limited Inc., the company behind USDT stablecoin, announced on Thursday that it has reduced its commercial paper holdings to zero, replacing them with U.S. Treasury bills.

Commercial paper is a short-term, unsecured debt issued by companies, whereby the value of the paper depends on the issuing company. Commercial papers are normally considered less reliable or less stable than other debt instruments like U.S. Treasury bonds.

On Thursday, Tether disclosed that it has now eliminated all commercial paper from its reserves. The firm said it has cut down more than $30 billion of commercial paper without any losses and increased its direct exposure to U.S. Treasuries by more than $10 billion in the last quarter.

The USDT stablecoin issuer said the move is part of the company’s “ongoing efforts to increase transparency” and back its tokens with “the most secure reserves in the market” — in hopes to ensure investor protection. “Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market,” Tether tweeted on Thursday.

The tweet noted that zeroing out the balance of its commercial paper holdings was not only made to be a step toward greater transparency and trust for the company but also for the entire stablecoin industry.

Currently, there are about 68.4 billion tether tokens in circulation, meaning that USDT has a market capitalization of $68.4 billion.

Earlier this month, as reported by Blockchain.News, Tether reported that it reduced its commercial paper holdings to less than $50 million. As of September 30, the firm announced that it increased its U.S. Treasury holdings to 58.1% of its total portfolio from 43.5% of its total portfolio as of June 30.

In the past, the company said that it would cut down its commercial paper holdings to zero by the end of the year due to rising concerns over the stability of the Tether ecosystem and its stablecoin, USDT.

Last year, New York regulators fined a multimillion-dollar against firm over concerns associated with the composition of its reserves. Since then, Tether has been committed to improving the quality of its reserves, in part by eliminating the amount of commercial paper it holds.

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Tether Boosts US Treasury Holdings Behind USDT, Further Reducing Commercial Paper

Tether, the crypto firm behind USDT stablecoin, on Monday, announced that it has increased its holding of U.S. Treasuries to 58.1% of its total portfolio while reducing its commercial paper holding to less than $50 million. Tether Chief Technology Officer Paolo Ardoino revealed the matter via Twitter social media.

Mr. Ardoino disclosed that on September 30, Tether increased its U.S. Treasury bill holdings to now account for 58.1% of stablecoin issuer Tether’s reserves – that is an increase of 14% from the previous standing. As of June 30, the company’s U.S. Treasuries stood at 43.5% of its total portfolio.

In July, Tether clarified that it “holds no Chinese commercial paper” and said its total commercial paper exposure had been cut to $3.7 billion from $20.1 billion as of May this year. During that time, Tether said that it would completely rid itself of commercial paper backing for its U.S.-dollar stablecoin USDT by the end of the year, as part of a plan to reduce exposure to riskier assets.

Its statement came as a response to the ongoing FUD around Tether, with some reports alleging that Tether’s commercial paper portfolio was 85% backed by Chinese or Asian commercial papers. Tether refuted such reports, stating that such allegations were completely false.

Stablecoins were under increased scrutiny after the collapse of the TerraUSD token in May. Usually underpinned by reserves of assets such as the U.S. dollar, gold, and government debt, stablecoins are widely used in crypto trading. Tether’s reserves consist of commercial paper (short-term debt issued by companies) and U.S. Treasury bonds.

Since the fourth quarter of 2021, Tether has been committed to reducing its holdings of commercial debt in its reserves, as the crypto firm continues facing questions about what its digital currency is actually backed by.

There has been controversy over claims made by Tether and its reserves. Last year, Tether disclosed that it held some cash but also purchased a large amount of commercial paper, which is short-term corporate debt. This raised concerns given that Tether does not disclose which companies it holds commercial paper from, and where those entities are based.

Last year, the U.S. Commodity Futures Trading Commission (CFTC) fined Tether $41 million for “making untrue or misleading statements” that its USDT stablecoin was backed 100% by corresponding fiat currencies. Last month, a New York judge ordered Tether to provide evidence of the USDT backing of its reserves.

The crypto firm aims to cut its commercial paper holdings to zero, as part of efforts to address concerns about the quality of assets underpinning its stablecoin amid the crypto market meltdown. In July, Tether revealed it hired accountancy firm BDO Italia to certify its reserves and that it would aim to release monthly reports by the end of the year.

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Tether Says No Chinese Commercial Papers Holding on its Reserve

Tether Holdings Ltd, the blockchain startup that is in charge of the USDT stablecoin issuance and operations, has come out yet again to address the growing rumours about the composition of its reserve base. 


Per the update on Wednesday, the stablecoin issuer said it is unlike what is currently in circulation. It holds no Chinese Commercial Paper as a part of the security to protect the integrity of the USDT. The firm warned against the impacts of false news, which can literally do more damage to the ecosystem than even cyber threats.

“The spreading of false information is the biggest threat to the cryptocurrency industry that currently exists. It is a threat of the same concern as scams, hacks, or cyberattacks because the spreading of false information risks not only the reputation of the industry but also each and every member of the community,” the company wrote in the update.

It clearly outlined that its total Commercial Paper exposure has been slashed from 30 billion as of July 2021 to approximately 3.7 billion nowadays. The firm said it plans to reduce the commercial papers to about 200 million by the end of August this year and its ultimate goal is to take the number to 0 latest by the end of November this year.

Maintaining a robust reserve has always been a major requirement for running a stablecoin like the USDT. While it has been bedevilled by a number of controversies with regulators in the past, Tether is now committed to publishing a regularly updated report about its stablecoin reserve portfolio.

Circle, the issuer of the second largest stablecoin, USDC, has also joined this trend as both stablecoin companies have continued to face scrutiny following the collapse of TerraUSD (UST) algorithmic stablecoin. Regulators are determined to prevent any other such mishap, and the oversight on these platforms has grown over the past couple of weeks.

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Auditors reveal USDC backing as Jim Cramer sounds alarm over Tether’s mad money

Auditors working for Circle have disclosed the reserves backing the firm’s USDC stablecoin, while Mad Money’s Jim Cramer has questioned Tether’s lack of transparency with its USDT reserves.

Multi-national tax advisory firm Grant Horton conducted the audit, and a reserve attestation report was published on July 20 which showed that 61% of USDC’s reserves were held in cash and cash equivalents equating to $13.4 billion, as of May 28.

Circle’s total commercial paper accounts for 9% of its reserves, and the figures provide a stark contrast to Tether’s reserves, in which undisclosed commercial paper accounted for 49.5% of its total reserves — something that Cramer has been “sounding the alarm” about recently.

The Circle report defines cash as deposits at banks and Government Obligation Money Market Funds, while cash equivalents are defined as securities with an original maturity less than or equal to 90 days.

On May 28 there was 22,176,182,251 total USDC in circulation, with the total fair value of Circle’s U.S. dollar-denominated assets held in segregated accounts fully backing the supply of USDC according to the report.

Circle noted that it voluntarily disclosed its reserves as part of its transparency goals, with the firm revealing plans to go public via a special purpose acquisition company (SPAC) earlier this month.

USDC Reserve Breakdown: Circle

‘Yankee CDs’ and US Treasures represented the next biggest share of assets backing the reserves at 13% and 12% each, with a combined total value of $5.6 billion.

Yankee CDs are defined as “USD denominated Certificates of Deposit issued in the US by branch(es) of Foreign Banking Organizations,” with a maximum maturity of 13 months, while the U.S treasuries have a maximum maturity of three years.

The total commercial paper allocations represent 9% worth $2 billion, corporate bonds account for 5% worth $1.1 billion, and municipal bonds and U.S. agencies comprise 0.2% worth $100 million.

Circle’s USDC reserve breakdown was published amid increased scrutiny on the stablecoin sector from the U.S. government, with United States Treasury Secretary Janet Yellen meeting with other financial regulators this week to discuss a regulatory framework for stablecoins.

Circle CEO Jeremy Allaire emphasized in a July 20 blog post that the firm is committed to providing transparency of its operations and working within the traditional financial system:

“Core economic activities underpinning USDC are built inside the perimeter of the U.S. financial system, and not outside of it.”

Jim Cramer thinks Tether is Mad Money

Speaking during a July 20 interview with The Street, Jim Cramer, the host of CNBC’s Mad Money questioned Tether’s lack of transparency and is asking why the firm hasn’t disclosed what the large percentage of commercial paper backing USDT is.

Tether released a brief reserve breakdown on May 13 and did not mention any independent review conducted on behalf of the firm.

Tether’s reserve breakdown showed that as of March 31, three-quarters of its reserves were held in cash, cash equivalents, other short-term deposits, and commercial paper. Amongst that category, commercial paper accounted for 65.39%, with cash alone accounting for just 3.87%.

Related: Stablecoins under scrutiny: USDT stands by ‘commercial paper’ tether

The firm is yet to reveal what comprises its commercial paper holdings, and Cramer has been sounding the alarm bells:

“I am concerned about Tether, and I’m not gonna stop sounding the alarm until I know what Tether has. They’ve got about $60 billion in commercial paper. Tether open up the kimono, what commercial paper do you own?”

“Why wouldn’t they tell us?” he added, as he questioned whether the SEC will step in to find out.

“There’s a belief that a lot of the commercial bank paper, is Chinese bank paper, why not put that to rest and tell us it isn’t?” he said.