Tether reveals the breakdown of its reserves for the primary time, the stable coin has always been criticized for not being open about its reserves, therefore the breakdown came as a surprise to most investors and will be a subsequent step in transparency.
The breakdown shows that Tether held 75% of its reserves in cash equivalents, other short-term deposits and cash equivalent. In fact, cash equivalent formed the bulk with a 65% share. Followed by Fiduciary deposits (24%), reverse repo notes (3.60%), treasury bills about 3% and actual cash only 3.87%.
The remaining 25%
The rest of the reserve is split into three different categories. Secured loans–none of which are two affiliates–account for 12.55% of total reserves; corporate bonds, funds and precious metals account for nearly 10%; and other investments, including digital tokens, account for 1.64%.
It’s not clear what the ratings of the cash equivalent or corporate bonds are, which agencies rated them, or which companies issued them. The transparency many of us expect from Tether isn’t there yet, but breaking down their reserve may be a step within the right direction.
The bigger picture
USDT may be a vital player within the crypto market and has long had issues with its reserve and whether the corporate backed its coins with real dollars. Their history of trying to prove they backed their currency is long. The primary firm hired was audit firm Friedman LLP, which produced a preliminary report that issued, the quantity of USDT Tether was backed by its cash reserves, albeit with several caveats.