PARIS – Crypto company Tether plans to reduce its commercial debt holdings in its reserves as the issuer of the world’s most widely used “stablecoin” continues to face questions about what actually supports its digital currency.
Last year, Tether revealed that it had little cash, but also bought a large amount of commercial paper, which is short-term corporate debt. This has raised concerns, given that Tether does not disclose exactly which companies it holds trading papers from and where these entities are based.
But the company is reducing the amount of commercial paper in its reserves. In the fourth quarter of 2021, trading securities accounted for just over 30% of Tether’s total reserves, down more than 44% in the third quarter.
“Over time, we will continue to reduce trading, we are not done with the decline,” Paolo Ardoino, chief technology officer of Tether and related cryptocurrency exchange Bitfinex, told CNBC on Wednesday at a blockchain summit in Paris.
Ardoino said Tether transferred the money from that trade paper to US Treasures.
Stablecoin is a type of digital currency designed to be pegged to real-world assets such as the US dollar. Their value should not fluctuate as much, unlike the wild fluctuations observed in cryptocurrencies such as bitcoin.
Tether issues the USDT token and has a market capitalization of more than $ 82 billion. Crypto traders use the USDT to trade cryptocurrencies such as bitcoin, instead of exchanging their money in the fiat version of the US dollar.
But there was controversy over Tether’s claims and reservations. Last year, the US Commodity Futures Commission fined Tether $ 41 million for “false or misleading allegations” that his USDT token was backed by 100% of the relevant fiat currencies.
Last year, as part of an agreement with the New York Attorney General on a case-by-case basis, Tether agreed to provide a breakdown of assets supporting his digital currency.
But she has not disclosed the companies whose commercial papers she owns. However, Tether reveals the ratings for the quality of the debt it owns.
Ardoino promised additional transparency, but did not specify what else the company could reveal.
“Our journey to increased transparency is not over yet,” Ardoino said.