According to a report, Tether Holdings Ltd.’s total assets fell by about 20% in the second quarter, illustrating the impact of higher redemptions on the stablecoin operator’s cryptocurrency in circulation.
As of June 30, the stablecoin operator had assets worth at least $66.4 billion, according to a phony assurance released on Friday by the accounting company BDO Italia. Total liabilities of $66.22 billion were owed by Tether, of which $66.2 billion was related to the company’s issuance of digital tokens.
That contrasts with holdings of $82.4 billion in March, two months before the algorithmic stablecoin TerraUSD‘s collapse threw the cryptocurrency market into a tailspin. Tether briefly broke its tie to the dollar during the second quarter, which led to an increase in redemptions of its USDT token.
With a total circulation of $67.7 billion on Friday, USDT is the most actively traded cryptocurrency in the world. It relies on a reserve of cash and cash equivalents to preserve a one-to-one exchange with the US dollar. Regulators around the world have focused attention on stablecoin issuers due to a perceived lack of transparency and have questioned the quality of the assets utilized by Tether for that reserve in the past.
Tether disclosed $28.9 billion in US Treasury bills as part of the reserves supporting its token, a common asset used by stablecoins to guarantee liquidity with an average maturity of under 60 days. At the end of June, it owned $8.4 billion in the longer-dated commercial paper; however, a Thursday report from Tether stated that it has since dropped to $3.7 billion.
The stablecoin issuer stated that after cutting that number by 58% during the quarter, it expects to have sold off all of its commercial paper by early November. Approximately $49.8 million of paper was set to expire between September and December as of June 30.
It continued that further assets totaling $6.8 billion were held in money-market funds, and an additional $5.5 billion was earmarked for “other investments,” which included cash and bank deposits. Tether announced on Thursday that it parted ways with MHA Cayman, a company based in the Cayman Islands, and started working with BDO as its accounting partner last month.
As part of a settlement agreement on claims that it misrepresented its holdings in earlier years, the company and its affiliated firms started reporting their activities to New York quarterly in February 2021. Tether has committed to reducing its holdings of commercial paper, which regulators may view more skeptically as a potential source of liquidity redemption after a collapse of the paper market in 2020.
