Tether Stablecoin Issuer Slashes Its Commercial Paper Holdings to Zero

Tether, the firm behind the stablecoin, has revealed that after months of gradually lowering its holdings of commercial debt for its reserve assets, it now holds no more commercial paper.

The change occurs less than two weeks after the firm declared it had reduced its exposure to commercial paper to less than $50 million. Unsecured, short-term debt issued by businesses is known as commercial paper. Comparatively speaking, CP is more stable than US Treasury bonds.

The announcement made claims that U.S. Treasury bills have taken the place of commercial paper (T-Bills). According to the company, Tether’s holdings in commercial debt had a value of about $30 billion as of July 2021 before declining to zero without incurring any losses.

“Today, the goal to bring the figure down to zero has been fulfilled,” Tether said.

The firm claimed that the action was a part of its efforts to improve transparency and provide more stable and liquid market reserves to support its stablecoins. The firm claimed that the action was a part of its efforts to improve transparency and provide more stable and liquid market reserves to support its stablecoins.

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 firm added.

In its most recent update, Tether did not state how many T-bills were included in its portfolio. On September 30, 2022, the firm declared that its investment in T-Bills was 58.1%.

In the past, Tether asserted that each of its tokens was backed 1:1 by dollars kept in a bank. However, the company revealed it relied on a variety of other assets, including commercial paper, to support its token after settling with the New York attorney general.

Image Credit: Shutterstock