Tether fulfilled its promise of eliminating commercial paper holdings.
Tether Holdings Limited, the issuer of Tether (USDT) stablecoin, announced that it had eliminated all of its commercial papers.
According to the announcement shared on Tether’s blog, the company is replacing its commercial papers with US Treasury Bills (T-Bills).
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Commercial papers are short-term, unsecured debt obligations that usually carry a higher credit risk.
In the announcement, Tether claims that by eliminating commercial papers, Tether aims to protect investors and increase transparency. The announcement reads:
Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market. This is a step towards even greater transparency and trust, not only for Tether but for the entire stablecoin industry.
The data shared on Tether’s announcement shows that Tether started reducing its commercial paper holdings in September 2021. The most signification reduction occurred from April to July 2022. During this time, Tether managed to cut the worth of its commercial papers by more than $10 billion.
Back in May, Tether revealed that it started gradually reducing its commercial papers. At that time, Tether shared that the reduction reached 17%, whereas US Treasury Bills and money market funds increased by 13%.
Whereas, in June, rumors started spreading that Tether’s commercial paper portfolio is 85% backed by Asian and Chinese short-term loans. At that time, Tether claimed that these rumors were false and added:
[Commercial papers] will gradually decrease to zero without any incurrences of losses. All commercial papers are expiring and will be rolled into US Treasuries with a short maturity.
It seems that Tether has fulfilled its promise slightly earlier than expected. At the end of July, Tether claimed that it will eliminate all commercial papers by the end of October or early November 2022.
In other news, at the end of September, the judge for the United States District Court for the Southern District of New York, Katherine Polk Failla, ordered Tether to provide information about its stablecoin’s USDT backing.