.Tether_to will further reduce its dependence on commercial paper
Tether's reserves have been the subject of heated debates for years, with some critics arguing that its stablecoin could beLast May, Tether published a breakdown of the reserves that back its controversial USDT stablecoin for the first time. The pie chart revealed that a whopping 65.39% of the company's reserves were backed by unspecified commercial paper, a form of short-term debt issued by companies in order to raise funds.
The revelation hardly managed to quell concerns about USDT's sustainability since it was not clear which companies issued the commercial paper that comprised the majority of Tether's reserves. Last September, the stablecoin issuer denied holding any commercial paper of the embattled Chinese real estate developer Evergrande.
JPMorgan's analysts opined that Tether was having a hard time finding a bank that would be willing to take deposits from the biggest issuer based on the composition of its reserves. In the fourth quarter, the company announced that it had reduced its commercial paper holdings by 21% while substantially increasing the share of Treasury bills. Commercial debt currently comprises less than a third of the company's reserves.
Tether is obliged to publish quarterly breakdowns of its reserves as part of the settlement agreement that was reached with the New York Attorney General's Office that was reached in February. Circle, Tether's main competitor, does not produce such breakdowns.
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