Tether cuts its commercial paper reserves by 58%
Tether Crypto Stablecoin
Modified Date:- Published Date:-Categories: Cryptocurrency
The stablecoin issuer has confirmed a reduction in its commercial paper reserves, addressing speculation of a lack of support for its USDT token. Tether has reduced its paper reserves by about 60%. The world's largest stablecoin issuer announced on Friday that it has reduced its stake from $20.bln to $8.5 bln in a bid to diversify into Treasury bonds. According to the update, its commercial paper will be further reduced to about $ 3.5 billion. This will continue until it brings us to zero. Commercial paper is a short-term, unsecured loan issued by financial institutions and large firms to finance liabilities and inventories and meet other expenses. It is not backed by anything other than the issuer's words to the investor to pay the debt on the agreed date. The value of commercial paper depends on the issuer. Compared to secured debt, this financial instrument has low liquidity.Tether was once accused of concealing the truth of its USDT token supply and its backing, leading to speculations that the company is tied to financial companies and hedge funds. The company was eventually fined $18.5 mln for lying about its reserves. Still, Tether maintained that the statement was misunderstood. Seeking redemption, it published a record of its holdings, independently verified by MHA Cayman. In the report, Tether said it has $39.2 billion in Treasuries and $4.1 billion in deposits. The company further clarified that it has $6.7 billion in money markets and about $3 billion in secured loans. Bitcoin and Ether are at their lowest level in over a year. The stablecoin market is one of the worst hit, with its major issuer, Tether, facing increasing pressure from investors over a potential massive crash. Financial expert Hilary Allen said the company is the life wire of the crypto space. An explosion would affect the entire system. The company assures investors the safety of their cash as its stablecoin reserves are backed by fiat and other assets. However, investors are still apprehensive, given that most of its reserves are in commercial paper.
Tether Stablecoin, Cryptocurrency, Bitcoin, Ethereum, USDT Token, Commercial Paper, Financial Institutions, Fiat Assets, Crypto Space