Stablecoin Issuer Tether Reports $700M Profit, Complete Exit From Commercial Paper
Tether's assets as of Dec. 31 stood at $67 billion with liabilities of $66 billion, almost all of which relates to digital tokens issued.
Tether, issuer of the world's largest stablecoin, reported a $700 million fourth-quarter profit and said it completely moved away from holding commercial paper as part of the reserves backing its USDT token.
The majority of its holdings ($39.2 billion) were in U.S. Treasury bills as of Dec. 31, according to an attestation from BDO. The rest of its $67 billion of assets were distributed across money market funds, cash and other items. Secured loans were reduced by $300 million, in line with a plan to reduce them to zero this year.
Tether had set a goal for eliminating commercial paper – a type of short-term, unsecured debt – by the end of 2022, which it met.
The quality of the holdings backing stablecoins came under greater scrutiny last year following the collapse of algorithmic stablecoin terraUSD (UST), which had a market capitalization of $18 billion prior to its downfall. Tether first published a breakdown of its reserves in May 2021, revealing that 49% of its assets were backed by commercial paper. Subsequent attestation reports showed a gradual decline in the proportion of commercial paper on Tether's books.
In September, the company was ordered by a U.S. judge to produce records relating to USDT's backing during a lawsuit that alleged Tether conspired to issue the stablecoin as part of a campaign to inflate the price of bitcoin (BTC).
UPDATE (Feb. 9, 2023 12:39 UTC) : Adds commercial paper holdings to first paragraph, background on stablecoin scrutiny in second, further details starting in third.
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