Stablecoin issuer Tether Holdings Limited has removed its exposure to commercial paper, addressing a long-standing issue of controversy among naysayers who have criticized the quality of its reserves.
In addition to removing commercial paper from its reserves, Tether announced on Oct. 13 that it had replaced those investments with US Treasury Bills. “Reducing commercial paper to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves on the market,” the company said.
While Tether has long been the subject of public scrutiny over its reserves, critics have focused on its asset composition over the past year. Specifically, in October 2021, Bloomberg speculated that Tether could have an oversized exposure to Chinese commercial paper at a time when one of the country’s largest real estate developers, China Evergrande Group, was on the verge of collapse.
As always, @paoloardoino and the Tether team stay true to their words. Paolo said CP exposure will be zero by October month end. Donate. It’s exciting to see asset reserve CP exposure go to zero. It gives Tether a strong basis to harness even more adoption for the coming decade. https://t.co/sMj4kCONkO
— Gabor Gurbacs (@gaborgurbacs) October 13, 2022
As always, Paolo Ardoino and the Tether team remain true to their words. Paolo said exposure to commercial paper will be zero by the end of October. Done. It is exciting to see the asset reserve commercial paper exposure go to zero. It gives Tether a strong foundation to further leverage adoption for the next decade.
Commercial paper is a short-term, unsecured debt obligation issued by a corporation or financial institution that typically carries a higher credit risk.
In June, Tether reported that 85% of its commercial paper portfolio was backed by Chinese or Asian commercial paper. At the time, the company also said it would ultimately reduce its exposure to commercial paper to zero. In the following months, Tether released regular updates showing a sharp drawdown in its commercial paper holdings.
In AugustTether hired BDO Italia, a member of the accounting organization BDO Global, to begin regular reviews and attestation of its dollar reserves. The stablecoin issuer said it planned to increase the frequency of its reports from quarterly to monthly.
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