Tether’s chief technology officer, Paolo Ardoino, said the company will reduce its commercial debt holdings, speaking to CNBC on April 13 at the Paris Blockchain Week Summit.
The world’s largest stablecoin is currently backed by a mix of commercial debt, cash and cryptocurrencies, but it has yet to produce a full official audit of its reserves.
“Over time we will keep reducing the commercial paper, we aren’t finished yet with the reduction,” he stated.
Reductions on commercial paper
Ardoino added that the company had transferred the money from this commercial paper to US Treasury bonds. Tether has already reduced its commercial paper, or holdings of short-term debt, in an effort to provide more transparency regarding its reserves.
The company cut its commercial paper holdings by 21% in Q4 2021, additionally, it almost doubled its allocation to Treasury bills or short-term liquid government debt. Commercial paper made up a little over 30% of Tether’s total reserves in the fourth quarter, down from more than 44% in the third quarter.
There has been a lot of controversy regarding the reserves of the stablecoin, drawing scrutiny from US lawmakers. The Commodity Futures Trading Commission (CFTC) fined Tether $41 million last year for “making false or misleading statements” that USDT was entirely backed by fiat currencies.
Tether agreed to provide a breakdown of the assets backing its digital currency as part of a settlement with the New York Attorney General. However, it has yet to disclose which companies it holds commercial paper for.
“Our journey towards increased transparency is not yet complete,” Ardoino said, but did not elaborate.
Stablecoin Ecosystem Outlook
The current USDT supply is 82.6 billion, according to the Tether Transparency website. This is pretty close to its highest ever level and represents an increase of 80% over the past 12 months.
The vast majority of this supply is split almost evenly between the Tron and Ethereum networks, with the former having just over at 41.7 billion USDT. On April 13, the company announced that it had launched the stablecoin on Polkadot’s Kusama network.
Tether’s closest rival, Circle, has just over 50 billion USDC in circulation, which is an increase of 355% over the past 12 months. In total, the stablecoin market is worth $186 billion, which represents around 9.7% of the total cryptocurrency market capitalization.
