With mounting concerns over Tether’s growing number of secured loans and it being a reason for the stablecoin issuer’s eventual demise, Tether came out with an official announcement later today. The crypto firm is now planning to minimize its loan exposure to zero by the year 2023.
Tether’s 2023 Goal
According to its announcement, the internal team at Tether is prioritizing transparency, accountability and operational eminence to safeguard itself from any calamity. Unlike the growing number of crypto firms going bankrupt or on the brink of facing bankruptcy risks due to high leverage, widespread fraud, and poor risk management, Tether plans to continue its 8-year long legacy forward.
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After The Wall Street Journal reported that the stablecoin operator’s growing list of loans would make it impossible for it to repay redemptions in the event of a crisis, Tether announced that it would remove all secured loans from its backing in 2023.
In response to the most recent attack on Tether, the company states that,
Tether is professionally & conservatively managed and this will be demonstrated once again by successfully winding down the lending business without losses
Read More: Tether CTO Criticizes Coinbase For Asking Users Convert USDT To USDC
Additionally, the announcement further states that “The secured loans held in the reserves are overcollateralized and covered by extremely liquid assets”.
$6.1 Billion In Loans
According to the firm, as of September 30, its loans totaled $6.1 billion, or 9% of Tether’s total assets. In the third quarter, the group’s consolidated total assets even exceeded $68 billion.
Tether previously asserted that it would ensure that borrowers were provided highly liquid collateral for these loans, but now the operator apparently intends to do away with them entirely.
Tether FUD followed By Binance
The news comes after the collapse of the crypto exchange FTX, and the more recent rumor surrounding Binance’s partial reserves leading to a lingering fear among the crypto community.
Tether also recently introduced the Chinese Yuan (CNHT) to its growing family of stablecoins which includes USDT, EURT and MXNT.
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Source: https://coingape.com/this-move-by-tether-finally-put-all-fuds-to-rest/