Tether, the world’s most-used stablecoin, is planning to lower its commercial debt holdings in its reserves, as the issuer of the digital currency continues to face questions about what its digital currency is actually backed by.
Tether acknowledged last year that it had some cash but had also purchased a significant quantity of commercial paper, which is short-term corporate debt. Tether does not identify whose companies it holds commercial paper from or where those entities are situated, which has caused concerns.
However, the company has been lowering its commercial paper reserves. Commercial paper accounted for little over 30% of Tether’s total reserves in the fourth quarter of 2021, down from more than 44% in the third quarter.
“Over time we will keep reducing the commercial paper, we aren’t finished yet with the reduction,” Paolo Ardoino, chief technology officer of Tether and affiliated cryptocurrency exchange Bitfinex, told CNBC on Wednesday at the Paris Blockchain Week Summit.
Ardoino stated that Tether has transferred funds from this commercial paper to U.S. Treasurys.
Controversy over Tether’s transparency
However, there has been some debate about Tether’s claims and reserves. In the previous year, the U.S. Tether was fined $41 million by the Commodity Futures Trading Commission for “making false or misleading claims” that its USDT token was backed 100 percent by matching fiat currency.
Tether agreed to publish a breakdown of the assets underlying its digital currency as part of a settlement with the New York Attorney General over a separate case last year.
It has not, however, disclosed the companies whose commercial paper it owns. Tether does reveal the quality ratings of the debt it owns.
Ardoino promised more transparency but didn’t say what more the company would reveal.
The USDT coin is issued by Tether, which has a market valuation of more than $82 billion. Rather than exchanging their money for the fiat form of the U.S. dollar, crypto traders utilise USDT to trade in and out of cryptocurrencies like Bitcoin.