Tether has cut its holding of commercial paper, and favored Treasuries highlighting the stablecoin’s latest attestation report. As such, Tether now holds $286 million in non-US government bills.
A series of audits showed that short-term commercial paper made up the bulk of Tether’s bulk despite initial claims that the token was fully backed by US dollars. The issuer had reached a settlement with the New York state attorney general, who alleged that Tether wasn’t fully backed by the US dollar at all times, in 2021.
In the three months since its last attestation in February, Tether has cut about $4 billion in holdings of commercial paper. Experts describe the commercial paper as a short-term unsecured corporate debt that has been struck by an exodus of investors from the riskier corners of the fixed-income market.
MCA Cayman, the independent account that completed the attestation, believes that the evidence it obtained is sufficient and appropriate to provide a reasonable basis for its assurance opinion. The issuer and its cryptocurrency, this month, have come under deeper scrutiny. This can be attributed to the collapse of fellow stablecoin terraUSD, which is algorithm-based. UST’s crash cast doubt on the robustness of stablecoins and on its role as a less-volatile store of value in the highly-volatile crypto market.
But Tether trades at a 1:1 ratio to the dominant US dollar. However, it last traded at $1 on May 10 and has remained below that mark. This prompted investors to ditch cryptocurrencies and stablecoins alike. Tether saw a significant drop in circulation – the lowest in five months. It has fallen by nearly $10 billion so far in May.