Insight into the composition of Tether USDT reserves

On Thursday, Tether published a chart showing the allocation of the USDT stablecoin reserves. It reveals part of the truth, but not the whole truth.

For a long time, there have been concerns as to whether all deposits of the stablecoin Tether (USDT) are actually covered by the US dollar. Now, for the first time, Tether provides some kind of insight into this matter. As a reminder: USDT is the largest cryptocurrency linked to the US dollar.

On Thursday, the company released a chart showing the breakdown of reserves. It is dated March 31, 2021. It shows that Tether held nearly 76 percent of its reserves in the form of cash and other short-term deposits and commercial paper. The latter make up 65 percent of this. However, it remains open which company the Commercial Pacers come from. However, the numbers have not been cross-checked by an independent auditing company, so they should be treated with caution for the time being. Although there are two reports by the Caribbean chartered accountant Moore Cayman this year. They certified that Tether had full coverage. However, it is not explicitly stated in the reports how USDT is supposed to be fully hedged.

Well, one can argue that other stablecoin issuers like Circle and Gemini don't provide this information either. As a rule, they don't even provide their own breakdown of the reserve composition of their tokens. At Gemini, for example, it says succinctly that customers' reserves are either held in accounts with the FDIC deposit insurance fund or a Goldman Sachs fund that invests exclusively in US government bonds. However, unlike Tether, there was never any doubt about this depiction. 

Tether fulfills its obligation with the publication

The new composition report is part of Tether's effort to adhere to a settlement that is part of an agreement with the New York Attorney General (NYAG). The public prosecutor's office had previously investigated Tether and its sister crypto exchange Bitfinex for covering up losses of around $ 800 million. Bitfinex and Tether then paid a fine of $ 18.5 million. They agreed to publish quarterly breakdowns of their reserves as part of the settlement. 

We pledged to make this information available to both the Attorney General and the public. Today's release reflects our ongoing commitment to transparency

said Tether General Counsel Stuart Hoegner in a statement attached to the diagram.

Traders primarily use Tether to quickly transfer dollar values ​​between exchanges. This allows you to take advantage of arbitrage when a bank transfer is not available or simply too slow.