Tether Fires MHA Cayman as Attestation Provider

Tether has switched attestation providers from MHA Cayman to the Italian branch of BDO LLP.

Announced Thursday, Aug. 18, 2022, BDO Italia is expected to file an attestation report later this week on the reserves backing the $60 billion stablecoin, the most traded cryptocurrency in the world, including bitcoin.

Stablecoins are a type of cryptocurrency pegged to the value of another currency. They come in two flavors: those backed by fiat money reserves like U.S. dollars and those backed by an algorithm. A stablecoin issuer’s credibility hinges on its ability to have sufficient fiat currency liquidity to simultaneously honor redemption requests from all holders of its stablecoin.

Tether hoping to keep up with rivals as regulators circle

According to first-quarter attestations by MHA Cayman, Tether had $82.2 billion worth of USDT in circulation, matching $82.4 billion on its balance sheet.

In partnership with BDO Italia, Tether hopes to be able to release monthly reports instead of quarterly attestations. Rivals Circle Internet Financial and the Paxos Trust, issuers of USDC and PAX, respectively, already issue monthly reports.

Frequent reporting may become a mainstay of stablecoin issuers as regulators in the U.S., U.K., and elsewhere race to regulate the space.

While attestations are not as rigorous as full audits, they assure regulators and industry players that a stablecoin company can honor its obligations to holders.

Tether has had its share of run-ins with authorities

Launched in 2014, USDT is a critical cog in the functioning of the crypto ecosystem, as many cryptocurrency traders use USDT to buy other cryptocurrencies.

From as early as July 2021, Tether drew attention from authorities for a large number of commercial paper holdings in its reserves. Tether was fined by the Commodities and Futures Trading Commission and the New York Attorney General for allegedly lying about the composition of its reserves. In May, it promised to reduce holdings of commercial paper in favor of superior assets like treasury bills, seen in MHA’s first-quarter attestations. Its holdings of commercial paper were down from 31% at the end of Dec. 2021 to around 25%, while it increased its holdings of treasury bills from 44% to 46% in the same period.

Tether has historically refused requests to reveal where its reserves are held. However, reports surfaced in May that some of its reserves are held at a boutique bank in the Bahamas, Capital Union. Tether refused to comment on the matter. Being a private company, it is not required to disclose partnerships.

Shortly after the collapse of the algorithmic stablecoin TerraUSD in May 2022, holders of Tether (USDT) decided to cash out their stablecoin, briefly causing it to dip below its dollar peg to around $0.95 on May 12, 2022. It had recovered its dollar peg by May 13, 2022.

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Source: https://beincrypto.com/tether-fires-mha-cayman-as-attestation-provider/