The crypto crash has seen an increase in the demand for stablecoins, but the collapse of Terra and the UST stablecoin, which happened more than a week ago, has caused real panic in the stablecoin segment.
Some stablecoins like BUSD and USDC were feeling pretty good, fetching good prices in the crypto markets. Other stablecoins like DEI, USDT, and USDN found themselves under serious pressure because of a lack of trust from cryptocurrency traders.
To the eyes of many crypto investors, Tether’s USDT, one of the most popular stablecoins, should survive the crypto crash and provide a safe haven for investors’ funds. However, crypto traders still don’t trust USDT because of its seemingly overblown number of reserves and its run-ins with the U.S SEC.
The high number of commercial papers published in the reserves by Tether Holdings in December 2021 has worsened the situation. Commercial papers are less liquid, making them hard to get rid of during times of financial crisis.
Many analysts have warned Tether about this, with Tether’s CTO agreeing with them, promising to reduce their holdings of those securities and increase the exposure of U.S treasuries.
Tether Silences Haters and Reassures its Users
On May 19, Tether released its consolidated reserves report to the public, which showed a 17% quarter-over-quarter decline in commercial paper, from $24.2 billion to $19.9 billion.
The attestation, which was conducted by independent accountants MHA Cayman, represents Tether’s assets as of March 31, 2022, as follows:
- Tether’s consolidated assets are more than the consolidated liabilities.
- The value of consolidated assets is at least $82,424,821,101.
- Tether’s reserves against issued digital tokens are more than the amount needed to redeem them.
- Consolidated assets depict a significant decrease in average maturity and an increasing focus on short-term assets.
The report also shows that Tether has increased its investments in the money market and U.S. Treasury bills increased by 13%, rising from $34.5 billion to $39.2 billion.
Commenting on the report, Paolo Ardoino, Tether’s CTO, said that the past weak clearly depicts Tether’s strength and resilience. Tether is fully funded and its reserves are solid, conservative, and liquid.