Stablecoin issuer Tether has published a detailed response to reports that its reserves once included securities issued by Chinese state-owned companies. Media outlets, including Bloomberg, highlighted New York’s Attorney General (NYAG) documents revealing that Chinese securities backed Tether’s USDT stablecoin. In its response, Tether stated that the information presented by the media outlets needed to be updated and reflect the company’s current state. Tether clarified that its exposure to Chinese commercial papers was liquid, and all the issuers were stable with high ratings. Furthermore, the stablecoin issuer emphasized that its exposure to commercial paper holdings was reduced to zero last year, resulting in no financial losses.
Ongoing scrutiny and the lack of transparency
Tether and other stablecoin issuers have faced ongoing scrutiny and criticism for their lack of transparency regarding reserve holdings. The absence of clear information has raised concerns within the cryptocurrency community and regulatory bodies. While Tether has consistently defended its operations, allegations surrounding its reserve backing have persisted. Bloomberg’s report revealed that Tether’s reserves once included securities from prominent Chinese state-owned companies such as the Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China. These revelations further contribute to the skepticism surrounding Tether’s transparency and asset backing.
Tether’s settlement with the NY AG and reserves report
In February 2021, Tether reached a settlement with the New York Attorney General’s office over accusations of misleading information about its reserves and losses. The settlement involved providing documents and information to the NY AG, shedding light on Tether’s reserves as of March 31, 2021. While the attestation report for Q1 2021 showed Tether’s reserves worth $81.8 billion, consisting of US Treasuries, Bitcoin, and over-collateralized loans, it did not reflect the previous inclusion of Chinese securities. Tether’s response aims to address the concerns raised by the reports and reassert the stability and transparency of its current reserve holdings.
Conclusion
The response from Tether regarding reports of Chinese securities backing its USDT reserves emphasizes that the information presented is outdated and no longer applicable to the company’s current operations. Tether clarifies that its exposure to Chinese commercial papers was liquid, highly rated, and has been reduced to zero. While the lack of transparency surrounding stablecoin reserves remains a point of contention, Tether’s attestation report for Q1 2021 indicates substantial reserves predominantly composed of US Treasuries.
