Will boost transparency and reduce commercial paper holdings: Tether’s CTO

Tether’s chief technical officer stated that the company would continue to reduce its commercial debt holdings while also increasing transparency around the reserves that back its USDT stablecoin.

Why Tether is reducing its commercial paper holdings?

Tether, the long-discussed stablecoin issuer, has taken steps to lessen market uncertainty and risk around USDT, the crypto world’s largest stablecoin.

Paolo Ardoino, the chief technology officer of both Tether and Bitfinex (owned by the same parent firm), spoke with CNBC today about the stablecoin issuer’s “enormous steps” to boost transparency and “dramatically reduce” its exposure to commercial paper. 

He noted that his firm submits quarterly attestation reports to the New York Attorney General’s office.

Tether cut its commercial paper exposure by 21% in the last quarter, according to Ardoino, and he expects the company to continue to reduce its commercial paper holdings. The CTO stated that its falling commercial paper holdings would be supplemented with US Treasury bonds.

Tether does not now publish the companies in which it has commercial paper, although it does issue ratings. The “great majority” of Ardoino’s commercial debt assets were rated A2 or better, indicating that the credit was considered low-risk.

Tether backed by dollars

Tether Holdings is a company that invests in cryptocurrencies.

Stablecoins produced by centralized organizations, such as Tether’s USDT, are backed, theoretically, by assets that are more stable than cryptocurrencies, as opposed to decentralized or algorithmic stablecoins, such as DAI, which is controlled via the Maker Protocol and the MakerDAO.

The US dollar is an example of this. Stablecoins, as the name suggests, are intended to provide a more stable asset for trade and lending.

Tether was fined $41 million by the Commodity Futures Trading Commission in October for making false or misleading assertions that USDT was completely backed by dollars. 

Tether had been accused of holding billions of dollars in Chinese company debt in the form of commercial paper, which led to the penalties.

Tether Holdings was struck with a fresh class action lawsuit last December, the second in four months, over its claims that its stablecoin was entirely backed by dollars.

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Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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