Tether seeks to eliminate USDT's commercial paper underpinning

16-Jun-2022 By: Sudeep Saxena

Tether seeks to eliminate USDT's commercial paper underpinning

Tether, a prominent stablecoin startup, is aiming to eliminate commercial paper backing for its US dollar-based stablecoin Tether in the future.

Tether released a formal statement on Wednesday denying rumors that the company's commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and is trading at a 30% discount.

The stablecoin corporation termed such claims "absolutely incorrect," stating that "US Treasuries" currently account for more than 47 percent of total USDT reserves. Tether claimed in its latest assurance opinion given in May that commercial paper accounts for less than 25% of USDT's backing, totaling roughly $21 billion as of March 31.

Tether has continued to shrink its existing portfolio of commercial paper, lowering its volumes to $11 billion, according to the most recent statement. The corporation aims to decrease it to $8.4 billion by the end of June 2022, with the goal of finally clearing off its commercial paper underpinning, according to the statement:

“Without incurring any losses, this will gradually drop to zero. All commercial papers are about to expire and will be rolled into short-maturity US Treasury bills.”

Tether also brought up the current problem of the Celsius loan platform, stating that Tether's holding in Celsius was liquidated with no losses. "Apart from a tiny investment made out of Tether shares in the company, Tether has currently minimal exposure to Celsius," the company added.

Tether further said that claims claiming Tether has lent money to cryptocurrency venture capital company Three Arrows Capital are "categorically incorrect."

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