Tether (USDT) To Reduce its Commercial Paper Holdings by $5B After Rumours That it Had Exposure to Evergrande
Summary:
- Tether plans to reduce its commercial paper holdings by $5 billion on July 31st.
- Tether is committed to reducing its exposure to commercial paper holdings to zero and replacing them entirely with US treasuries.
- The move by Tether comes amidst rumours that its USDT reserves, through the commercial paper holdings, had exposure to the China-based embattled real estate company of Evergrande.
The team behind Tether has just announced plans to reduce their commercial paper holdings from the current $8.5 billion to $3.5 billion. The reduction comes from $5 billion worth of the commercial paper holdings expiring on July 31st this year.
The project’s CTO, Paolo Ardoino, further pointed out that Tether’s commercial holdings around the same time last year stood at $30.8 billion, which translates to a reduction of 88% in 12 months.
Tether is Committed To Reducing its Commercial Paper Holdings to Zero.
In addition, the announcement by Tether reiterated the company’s commitment to reducing its commercial paper holdings to zero and ultimately replacing them with US Treasuries.
As of June 15th, 25% of USDT’s reserves were backed by the stated commercial paper holdings, with an additional 47% of its reserves made up of US treasuries.
Rumours that Tether had Exposure to Evergrande and other Chinese Commercial Paper.
The news of Tether reducing its commercial paper holdings by $5 billion next month comes less than a week after the project’s CTO, Paolo Ardoino, posted a Twitter thread explaining that traditional hedge funds were determined to short USDT in the crypto markets.
According to Mr Ardoino, the hedge funds were betting against USDT after the collapse of Terra/UST. Their goal was to cause further panic using ‘coordinated attacks, a new wave of FUD, troll armies, and clowns.’
In addition, the hedge funds were motivated to short Tether (USDT) based on information circulating that its commercial paper portfolio had exposure to the embattled real estate company of Evergrande and Chinese or Asian commercial paper, which was trading at a 30% discount.
Mr Ardoino concluded his Twitter thread by reiterating that USDT is fully backed and one of the few stablecoins that can withstand redemptions to the tune of billions in 48 hours. He explained:
But as we always said, Tether had/has in fact >= 100% of the backing, never failed a redemption and all USDt are redeemed at 1$.
In 48 hours, Tether processed 7B in redemptions, averaging 10% of our total assets, something almost impossible even for banking institutions.
~ By John P Njui ~
