Tether, the issuer of the stablecoin, has claimed that its stablecoin is partially backed by non-US Government bonds.
In its recent “attestation” report, the company equally said its holdings of U.S. Treasurys grew from 13% to $39.2 billion in the 2022 first quarter.
For the amount of commercial paper, Tether fell from 17% to $20.1 billion and further went down to 20% since April.
The commercial paper holdings of Tether have become an issue for economists and regulators because of the money market potential exposure.
This is the first time Tether is revealing it’s purchasing government debt from nations outside the US alongside Treasury bills.
About $286 million, the amount of non-US bonds is just a minor part of over $82 billion in assets the company claims to have. However, the funds’ source and the governments issuing the funds aren’t clear yet.
Tether’s chief technology officer, Paolo Ardoino disclosed that the “latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative, and liquid.”
In the meantime, Tether is expected to always keep a 1-to-1 peg to the dollar. However, Crypto volatility that occurred last week alongside panic over the terraUSD collapse, a competing stablecoin, has temporarily dragged Tether below $1 on many exchanges.
And investors have withdrawn over $7 billion from Tether during the past week alone.
Consequently, Ardoino, Tether’s CTO, said, “This past week is a clear example of the strength and resilience of Tether. The company has maintained its stability through multiple black swan events and highly volatile market conditions.”
Meanwhile, the number of funds going out from Tether has ignited new questions about the reserves behind it. The company has claimed in the past to be backed solely by US dollars.
Is Tether lying?
In 2021, Tether began releasing its quarterly financials after a settlement with the New York attorney general that accused the firm of lying about its stablecoin’s backing. The allegation Tether has denied.
The documents and quarterly financials are signed by MHA Cayman, an accountancy company in the Cayman Islands.
Meanwhile, some investors and analysts aren’t yet convinced by Tether’s attestations. They’re now calling for a full audit. Tether has permitted the audit, saying it’s on the way.
Tether is an important part of the cryptocurrency market. It has over $74 billion in circulation. It’s the biggest stablecoin globally, facilitating billions of dollars of trades daily.
Often, investors keep their funds in Tether during Crypto heightened volatilities.