Stablecoin Tether boosts US Treasuries holdings

livemint.com:

Stablecoin Tether, the operator of the world’s most used cryptocurrency, said it had reduced the amount of commercial paper in the reserve backing its $74 billion stablecoin while has boosted its holdings of US government debt while cutting exposure to riskier assets.

Tether is the issuer of USDT, a stablecoin which relies on a reserve of US dollar and dollar-equivalent assets to maintain a one-to-one peg with the cryptocurrency. The quality of those reserves have previously been called into question for an over-reliance on assets with limited liquidity, with criticism levied at Tether over its lack of transparency on the matter.

In a statement on Thursday, Tether noted a 17% decrease in its commercial paper holdings to $20.1 billion compared to the previous quarter, and added that it had completed a further 20% reduction on that amount since April 1, which will be included in its upcoming report for the second quarter.

The token, run by a British Virgin Islands company, is designed to hold a value of $1. Tether promises it has sufficient reserves to allow all holders of the over-$70 billion worth of Tether in circulation to exchange their tokens for dollars.

Conversely, Tether said it had increased its investments in money market funds and US Treasury bills, rising more than 13% to a total of $39.2 billion. The average rating of its commercial paper and certificates of deposit has increased from A-2 to A-1, it added, while secured loans have decreased by $1 billion.

Tether’s total market circulation has taken a hit of more than $8.9 billion since the collapse of Terra first began on May 7.