Audit Report Finally Shows What Supports USDT
Tether USDT has revealed how it supports the approximately $74 billion of USDT currently in circulation. Tether released its consolidated reserves reportwhich confirms that the group’s consolidated assets, amounting to approximately $82.4 billion, exceed its consolidated liabilities.
This is good news for USDT holders as there was some mystery surrounding exactly how one of the leading and most widely used stablecoins was backed. Mainly due to clashes with the US Securities and Exchange Commission (SEC), made worse by the high proportion of much less liquid commercial paper in reserves, as shown by Tether Holdings at the end of 2021.
Furthermore, as UST crashed and burned in the last two weeks, all eyes were on stablecoins to prove their worth. While the financial mechanics and assets backing other leading stablecoins USDC, BUSD, and DAI are well known, Tether remained in the shadows.
The Big USDT Reveal
Finally, on May 19, Tether released a ten-page consolidated reserves report by independent accountants MHA Cayman. It shows the assets of the group as of March 31, 2022 as follows:
- Total consolidated assets are at least $82,424,821,101
- The group’s consolidated assets exceed its consolidated liabilities
- The pool’s reserves against issued digital tokens exceed the amount required to redeem them
- Consolidated assets show a significant decrease in average maturity with a focus on shorter-term assets
As mentioned, the estimated circulating supply of USDT at the time of writing is $74 billion, and here we see at least $82 billion in reserve. Simply put, if USDT goes bust for whatever reason, Tether has the reserves to cover it.
While the past week has been turbulent for some stablecoin projects with much lower adoption and liquidity, it has been a prime example of Tether’s strength and resilience. He deviated from its dollar peg by just $0.01 on a few occasions over the last two weeks, while BUSD, for example, saw a deviation of $0.05 at one point. Importantly, this was a temporary situation for BUSD and at the time of writing, it is back at $1.
The $1 question on everyone’s lips
In recent weeks, the rapid decline of one of the largest stablecoins pegged to the US dollar, Terra USD, has placed a giant magnifying glass on a segment of the industry worth an estimated $162 billion. In the aftermath of the UST debacle, other stablecoins began to lose their respective pegs, necessitating a broader review of the market and a deeper understanding of what stablecoins are and how they work.
Now that Tether has finally revealed how it supports its USDT stablecoin, the leading coins look stronger than ever. To learn more about the leading stablecoins and how they support themselves, we suggest you check out this article, and if you want to dig deeper, you can learn more here.
The foregoing does not constitute investment advice. The information provided here is purely for informational purposes only. Please exercise due diligence and investigate. The writer holds positions in various cryptocurrencies including BTC, ETH, and RADAR.