Tether Holdings Limited, maker of the US$66bn USDT stablecoin, has released the first independent attestation report into its accounts as conducted by major global accounting firm BDO.
While Tether conducted its first internal attestation report in May 2021 after being instructed to by the New York Attorney General (NYAG), the latest report marks the first time an independent institution has assessed Tether’s reserves.
Attestation reports are an essential transparency tool for determining how much cash or cash equivalents Tether (and other stablecoins) has in its reserves, and therefore, how stable it really is.
The hiring of BDO comes as Tether aims to shore up confidence in its USDT stablecoin after a volatile year for its competitors.
The collapse of fellow stablecoin TerraUSD had a huge knock-on effect for the entire cryptocurrency space, proving how reliant the market is on dollar-pegged digital assets.
Tether fell into legal and regulatory hot water in 2021 after the NYAG ruled that Tether misled the public over its collateralised position.
Rather than cash, Tether was almost entirely collateralised by commercial paper (i.e. unsecured debt).
Since then, Tether has sought to reduce its commercial paper holdings to zero by the end of 2022.
In line with that ambition, commercial paper holdings fell by more than 58% since the previous quarter.
What does the report say?
According to the BDO report, Tether holds US$8.4bn in commercial paper, comprising 12.6% of its total reserves of US$66.4bn.
The majority of commercial paper holds an A-1 rating or above, with slightly less than 18% holding an A-2 rating.
US treasury bills with an average maturity of less than 60 days comprise 43% of total reserves, while cash and bank deposits comprise 8.1%.
Other cash equivalents include money market funds, reverse repurchase agreements and non-US treasury bills, while corporate bonds, secured loans and other investments make up for approximately 20% of holdings.
Tether reserves of US$66.4bn are slightly above total liabilities, although factoring out unsecured debt implies an undercollateralised position at current.
“We are fully committed to maintaining our role as the leading stablecoin in the market,” said Paolo Ardoino, Tether’s chief technology officer.
"The utility of Tether continues to be supported by the transparency of its reserves and has been a leading source of stability allowing us to build a tool for the global economy."
All figures reflected assets held by Tether as of June 30, 2022.