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Tether, the world’s largest stablecoin, cuts commercial paper to 0


Tether, the world’s largest stablecoin, has cut its holdings of commercial paper to zero, replacing them with US Treasury bills instead, according to a blog post. The popular US dollar-pegged cryptocurrency said the move is part of tether’s “relentless efforts to increase transparency” and back its tokens with a “safe reserve”. best in the market” – with the ultimate hope of ensuring investor protection.

There are currently around 68.4 billion tether tokens in circulation, according to data from CoinMarketCap, up from 2 billion three years ago. The cryptocurrency has a market capitalization of $68.4 billion.

“Tether has led the industry in publishing transparent certifications every three months, constantly reviewing the offset of its reserves,” the statement continued.

Commercial paper is a form of short-term, unsecured debt issued by companies, and it is considered less reliable than Treasury bills. In October, Tether’s Chief Technology Officer, Paolo Ardoino, tweeted 58.1% of the company’s assets are in bills, up from 43.5% in June. It’s unclear where that percentage is now, but Ardoino wrote in a post on Thursday Tether was able to pay $7 billion, or 10% of its reserves, in 48 hours.

“Ask your bank or other stablecoins if they can do it, within the same timeframe, of course,” he wrote.

Thursday’s statement went on to note that getting rid of its commercial paper holding balances also means a step towards “more transparency and trustworthiness, not only for tether but also for the entire stablecoin industry.”

The stable corner of the crypto market has certainly had a confidence issue over the last year.

Last yeartether had to pay a multi-million dollar fine following a legal battle with the New York attorney general’s office over concerns related to the viability of the reserves and in May the collapse of terraUSD (UST), which was once one of the most popular coins. Stablecoin projects, cost investors tens of billions of dollars.

The collapse of the UST resulted in a falling domino effect across the broader crypto ecosystem. Part of the drop involved tether temporarily losing its dollar peg and dropping to as low as 95 cents.

But just before UST’s startling demise, Tether — the company behind the stablecoin of the same name — faced regulatory backlash over its reserves.

Most stablecoins are backed by fiat reserves, the idea being that they have enough collateral in case a user decides to withdraw their funds. (UST is one of a bunch of new “algorithmic” stablecoins that try to base their dollar rates on code.)

Previously, Tether claimed all their tokens were backed 1-1 with dollars stored in the bank. However, after a handle with the New York attorney general, the company revealed that it relies on a range of other assets, including commercial paper, to back its token.

In April, Ardoino told CNBC that the company is well equipped to deal with mass acquisitions, but the office of New York Attorney General Letitia James before Allegedly that Tether sometimes does not have the reserves to support its cryptocurrency dollar rate. It said, since mid-2017, the company has failed to reach banks and mislead customers about liquidity issues.

“The fact that Tether claims that their virtual currency is always fully backed by US dollars is a lie,” she added. Tether said in a statement on its website, contrary to speculation, “after two and a half years, there is no discovery that Tether has ever issued sets of tethers that do not favor or manipulate cryptocurrency prices.”

Critics have also raised concerns that the tether token has used to manipulate bitcoin pricea claim that Tether has repeatedly denied.

Carol Alexander, a finance professor at the University of Sussex, said: “While not large enough to cause disruption in the US money markets, Tether could eventually reach a scale where ownership The owner of the US Treasury became “really scary”.

“Let’s say you go down and instead of $80 billion, we have $200 billion, and most of that is in liquid U.S. government securities,” she said. “Then a collapse in the tether would have a significant impact on the US currency markets and only push the whole world into a recession.”

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