In May 2022, Tether demonstrated its reserves strength through its quarterly assurance opinion and vowed to reduce its investment in commercial paper significantly; bringing it to zero eventually. A new announcement was made today on its blog that by the end of this month, its commercial paper holdings will reduce to 3.4 billion. At the moment, it holds 8.4 billion dollars worth of commercial paper which means 5 billion assets will expire on the 31st of July.
The Ultimate Goal
With this move, Tether USDT is inching closer to fulfilling its commitment to its community that it will gradually bring this figure to zero. As a replacement, Tether is turning towards US treasuries as they are considered among the most preferred liquid assets. Being cash equivalent is an additional attribute that serves as a cherry on top.
Tether, which is considered the most reliable stablecoin, is doing this to guarantee its long-term stability. It has formed a strategy and now it is strictly abiding by it to diversify its portfolio. It has stressed on various occasions that it would keep making efforts to enhance its transparency. A few weeks back, the chief technology officer of Tether had also stated that they are closer to their target as around 80 percent of CPs have already been taken care of.
Background
The stablecoin network had previously declared that 47 percent of its total stablecoin reserves were US treasuries. It had also claimed that the soon to expire CP assets would also be replaced with US treasuries.
The stablecoin issuer had started its restructuring phase after being severely criticized for holding a large number of commercial paper assets. Prior to this, the company had claimed that its assets consist of USDs mainly but it was uncovered in a lawsuit filed against Tether that it is relying on commercial papers.
After this, Tether is paying close attention to this problem and trying to remain transparent. Now, the company has once again reiterated that it plans to bring the number of CPs to zero but this time it has backed its claim by the announcement of expiring 5B worth of commercial papers.
Another instance connects to this announcement as well when the tether was awarded a 41M fine for making false statements by the Commodity Futures Trading Commission (CFTC). Tether had decided to reach a settlement in this regard with the Attorney General (New York).
Key Take-Aways
Tether has confirmed through its official blog that 5B worth of its CP holdings are going to expire on 31 of this month and it intends to replace them with US treasuries.
The expiry of its commercial paper will bring the number down to 3.4 B as it currently holds 8.4B.
Tether is unwavering in its commitment to the resolution it has made to reduce the number all the way to zero in order to achieve greater stability and transparency.
The network is ready to put together a diversified investment portfolio that has a lower risk of losing money on individual assets.
