Reading time: ~2 m
Tether has paid out $10 billion to its customers in recent weeks, amid a major capitalization swap from the most volatile stablecoin, after Terra. The pace of withdrawals means that the company is effectively handling its responsibilities as depositors seek to move their money into more highly regulated stablecoins.
The latest repayment came after Tether published its latest reports, which show that as of the end of March, the company fully provided user deposits with a mixture of U.S. Treasury bills, bonds of other private companies in various “other investments.”
However, it is not known whether the reports are as encouraging for savers as they seem. If a company’s investment in cryptocurrency businesses fell in value during the market crash, then perhaps it struggled to match customer deposits.
It is assumed that the Tether currency will always be worth a fixed amount in this case one US dollar. According to the company, this is achieved by maintaining a large reserve of stable assets: while retail investors can buy or sell Tether on cryptocurrency exchanges, institutional investors can also simply pay money directly to Tether to get newly minted tokens, and can return the company’s tokens in exchange for cash.
Initially, the company claimed that all reserves were backed by US dollars one to one. However, following an investigation by the New York Attorney General, the company acknowledged that this was not always the case and said its currency was simply backed by “Tether reserves.” Following an investigation, the company agreed to publish a quarterly report detailing these reserves.
The latest statement, dated back to the recent cryptocurrency crash, shows that Tether holds about $20 billion in commercial paper, $7 billion in market funds, and nearly $40 billion in U.S. Treasury bills, all of which are generally stable investments.
However, another $7 billion is held in “corporate bonds, funds and precious metals” and “other investments (including digital tokens).” As part of Tether’s reserves, it is comparatively small, but it puts the company at risk of breaking its promise to be “fully secured” in the event of significant market fluctuations.
Nevertheless, CEO Paolo Ardoino is confident that Tether is fully secured and sustainable than ever, despite all the developments in the economy.
Author: Vadim Gruzdev, Analyst Freedman Club Crypto News
#CEO #Paolo #Ardoino #Tether #resilient