Tether Slashes Commercial Paper to Zero, Adding Credibility to USDT

Subh Rath

October 17, 2022

With the cryptocurrency world and its prominent players moving towards more significant changes, updates, and improvements as 2022 comes closer to its ending, Tether has also accomplished its goal.

On October 13, 2022, Tether announced that it had removed all of its commercial paper holdings from its reserves and replaced them with US Treasury Bills (T-Bills) investments. This declaration is made as part of continued efforts by Tether to promote transparency, with the protection of investors being the primary focus of the management of Tether’s reserves. 

How Does This Impact Tether and the Stablecoin Industry?

Tether has demonstrated its dedication to backing its tokens with the safest reserves available on the market by reducing the number of commercial papers it holds to zero. Not only for Tether but also for the whole stablecoin industry as a whole, this is a step towards increased transparency and trust in financial transactions.

Tether has been at the forefront of the market regarding transparency, publishing attestations once every three months and analyzing the components that make up its reserves. Tether has been continuously reducing its exposure to its commercial paper holdings over the most recent quarters without incurring any losses. On July 1, the Company provided an update on its success in further decreasing its commercial paper portfolio to a low of $3.5 billion, which was in line with Tether’s commitment to the community and was discussed in the previous update. On September 30, the business announced that its holdings of commercial paper had dropped below $50 million.

Considering all this, it’s viable to say that Tether accomplished the objective of bringing the number of commercial papers down to zero in 2022.

Tether Overview: A Popular Stablecoin

Tether’s primary objective is to offer a digital asset that is both “secure” and capable of sustaining a constant value. Because of this, USDC is considered a stablecoin because its value is fixed relative to that of the US dollar. The aim is for Tether’s value to remain constant relative to its peg at all times.

Steve Bumbera, chief operating officer of Many Worlds Token, also made a statement about the stablecoin’s vision: “The concept is that 1 Tether can always be sold for $1, regardless of market conditions.” 

The USD Coin (USDC), the Dai (DAI), and the Pax Dollar (USDP), to mention a few, are some of the stablecoins that Tether’s competitors include.

Cryptocurrency traders use Tether as a source of consistent and reliable liquidity. This allows them to enter and exit other cryptocurrency trades without the risk of unforeseen losses (or gains) resulting from price fluctuations.

In fact, by the 13th of this month, the 24-hour trading volume for Tether was $89 billion. As a result, Tether is the most liquid cryptocurrency, surpassing the likes of cryptocurrency market veterans Bitcoin (BTC) and Ethereum (ETH). In terms of market value, it is also one of the top three largest cryptocurrencies.