Tether Says It Has Ditched Commercial Paper. It’s a Good Sign for Stablecoins.

Tether said that it no longer holds commercial paper in its reserves, favoring U.S. Treasuries instead in a move that addresses worries about the quality of assets backing the world’s most popular stablecoin pegged to the dollar.

Each USDT token issued by


Tether


is meant to be backed 1:1 with the U.S. dollar. That is meant to ensure that the third-largest cryptocurrency after


Bitcoin


and Ether—with a market capitalization of almost $70 billion—doesn’t “break the buck,” rather than remaining at parity.