Tether’s First Reserve Breakdown Shows Token 49% Backed by Unspecified Commercial Paper

Financial System News

From coindesk

The new composition report is part of Tether’s efforts to stay in compliance with a settlement with the New York Attorney General.

Tether revealed the breakdown of its reserves for the first time, casting another sliver of light on the backing of USDT (0%), the largest cryptocurrency pegged to the U.S. dollar.

Much remains murky, however, in part because the pie charts provided by Tether on Thursday make no mention of any independent review by an accounting firm. Moore Cayman, an audit firm in the Caribbean with five employees, has published two reports this year attesting that USDT is fully backed. But the auditor (part of the Moore Global confederation of accounting and consulting firms) did not detail what exactly is backing the token.

To be fair, other stablecoin issuers like Circle and Gemini don’t typically produce breakdowns of their reserve compositions at all. Gemini’s accountant, for example, states in its attestations that the client’s reserves are held in either FDIC-insured accounts at State Street Bank or a Goldman Sachs Asset Management money market fund that invests solely in U.S. Treasury securities. The percentage of each is not provided — but then again, both are considered highly liquid and creditworthy assets (“money-good,” in Wall Street parlance). The same cannot be said of all the assets on Tether’s balance sheet.

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