Reading time: ~2 m
Tether’s CTO said the company will continue to reduce its commercial debt obligations and increase the transparency of reserves supporting stablecoin USDT.
The stablecoin issuer Tether has taken steps to reduce the market uncertainty and risks associated with USDT, the largest stablecoin in the crypto market.
AT CNBC interview Paolo Ardoino, CTO of Tether and Bitfinex (owned by the same parent company), stressed that significant steps have been taken to increase transparency, as well as to drastically reduce the impact on commercial paper. He mentioned that his firm sends a quarterly report to the New York Attorney General’s Office.
Ardoino said that Tether reduced its commercial paper holdings by 21% in the latest quarter and noted that the company will continue to reduce its commercial paper holdings. The dwindling holdings of private stocks and collateralized bonds will be replaced by US Treasury bonds, the CTO said.
Tether does not currently disclose the companies in which it holds commercial paper, although it does provide ratings. Ardoino said the “vast majority” of commercial debt is rated A2 or higher and the loan is considered minimally risky.
Recall that stablecoins issued by centralized companies such as USDT Tether, unlike decentralized ones such as DAI, which are managed through the Maker and MakerDAO protocol, are theoretically backed by more stable assets than cryptocurrencies. However, this is only theoretical. In fact, Tether never not published open collateral reportreferring only to the data of auditors conducted in the Bahamas.
Last October, the Commodity Futures Trading Commission ordered the company to pay a $41 million fine for falsely claiming that USDT was almost entirely backed by US currency.
The fine was preceded by allegations that the USDT issuer was holding billions of dollars of debt in commercial paper from China Evergrande Group’s Chinese companies. It is the scandal with the fall of the shares of this company that is associated with the transition to the US securities market. Plus later, last December, Tether Holdings faced a new class action lawsuit, the second in four months.
To avoid additional lawsuits and fines from investors and regulators, the company decided to pay more attention to business transparency (Sarcasm). How well this will work will become clear in the next few months. The reputation of Tether Holdings has suffered significantly, so the management will have to make a lot of efforts in order to restore market confidence.
Author: Vadim Gruzdev, analyst Freedman Сlub Crypto New
#Tether #cut #commercial #debt