Tether depletes its commercial paper holdings

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Tether depletes its commercial paper holdings

Tether announced that it has eliminated commercial paper from its reserves, replacing these investments with U.S. Treasury Bills (T-Bills). Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market. 

Tether has made a serious commitment to transparency and decentralization, and their efforts are worth a closer look. While it’s still too early to gauge the full extent of their intentions, Tether is holding up its end of the deal and moving toward greater transparency.

What are commercial papers?

Commercial paper is an unsecured, short-term debt (1-270 days) instrument issued by corporations. It’s typically used to finance short-term liabilities such as payroll and inventories. 

What are U.S. Treasury Bills (T-Bills)?

A Treasury Bill (T-Bill) is a short-term U.S. government debt obligation with a maturity of one year or less. These are widely regarded as low-risk and secure investments

Transparency

Tether has led the industry in transparency releasing attestations every three months, constantly reviewing the make up of its reserves. In the last quarters Tether reduced its exposure to commercial paper holdings constantly and without any losses. 

On July 1, the Company shared an update on its progress in further reducing its commercial paper portfolio to a low of $3.5B, which was on track with Tether’s commitment to the community. On September 30th, the company announced it was below $50M in commercial paper holdings. 

Critics

Financial Times earlier reported that the largest players in the U.S. commercial paper market were not aware of Tether’s participation. In response to that, Hoegner explained Tether’s operation, saying, 

“We maintain accounts and a number of banks, financial institutions, they request quotes for commercial paper offerings from their banks, who in turn request those brokers and other counterparties, both direct from issuers and on secondary markets.” 

This is statement could contradict the claims of Tether that they had commercial papers to start with. Does Tether dare to lie to its users? 

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