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Tether (USDT) provides US Treasury backing

 


Tether is the largest provider of stablecoins, including USDT, which is key to its position as a market leader. There have been, and still are, major concerns about the backing of these stablecoins. Years ago, during a court case in New York, it became clear that the stablecoins are not backed by dollars in a 1:1 ratio.


The result of the procedure was, among other things, more transparency with regard to the cover and accordingly the company delivers reports that are intended to convey to investors how things are in this area.


For a long time, debt securities were mainly held to ensure coverage, which critics repeatedly complained about.


US government bonds are replacing debt securities

According to a statement from the company , there have been no bonds in the portfolio since October 12. Instead, you rely on US government bonds. As a result, around $40 billion of USDT in circulation is backed by such bonds.


The remainder of the roughly $29 billion is secured by an unspecified mix of securities, precious metals, and digital assets. It is the last category in particular that has given critics headaches to this day. Because the exact composition is not known.


The fear is that price slumps in the crypto market will reduce the value of these digital assets and thus create a dangerous hole in the cover. So far, the worst fears have not come true and so Tether has not collapsed to this day. However, the collapse of Terra (LUNA) breathed new life into the debate.

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