Tether has released a breakdown showing how its reserves are managed for the first time ever.
The stablecoin issuer offers USDT, an asset that’s pegged on a 1:1 basis with the U.S. dollar. This means that a single unit of this cryptocurrency is worth $1.
Given Tether has a market cap of $57.7 billion, this should mean that it holds this exact amount in reserve in case investors want to redeem their coins for cold hard cash.
The breakdown shows that 75.8% of funds are held in cash and cash equivalents, including commercial paper, fiduciary deposits and Treasury bills.
Secured loans reflect 12.5% of funds, while 10% is devoted to corporate bonds, funds and precious metals. Meanwhile, about 1.64% is earmarked for other investments including Bitcoin.
Why This Matters
Tether says the publication “reflects our continued dedication to making this information public as part of our ongoing commitment to transparency and setting the standard in our industry” — and updates will be made on a quarterly basis going forward.
In the past, Tether had faced scrutiny over whether its stablecoins were fully backed, but independent accountants have published reports confirming that this is the case.
All of this comes as Tether and its parent company Bitfinex seek to comply with a settlement with the New York Attorney General that means it must provide a quarterly breakdown of its reserves.