Documents Reveal Details of Stablecoin Tether’s Previous Backing

Tether’s Disclosure of its Past Holdings and Banking Relationships Aims to Address Concerns and Improve Transparency

Documents released by the New York Attorney General reveal that Tether Holdings Ltd., the issuer of the largest stablecoin USDT, once held securities issued by Chinese companies as part of its reserves. This confirms long-standing speculation about Tether’s exposure to Chinese commercial paper. While Tether denied having any exposure to China Evergrande Group’s debt, it did not disclose whether it held securities of other Chinese companies. The quality of assets backing USDT has been under scrutiny due to its crucial role in crypto markets, and Tether’s ability to redeem tokens for dollars is vital for maintaining confidence in cryptocurrencies.

According to the documents, Tether held securities issued by major state-owned Chinese companies such as ICBC, CCB, and Agricultural Bank of China, as well as securities from other companies like Deutsche Bank and Barclays Bank. Tether’s banking relationships and lending activities were also detailed, showing significant loans to third parties and accounts held at various Bahamian banks. The documents provide insights into Tether’s operations and its reserves as of March 2021. Tether faced speculation about its reserves during the tumultuous summer of 2022, but it reiterated its commitment to liquidity and debunked rumors about its commercial paper portfolio.

Tether’s disclosure of its past holdings and banking relationships aims to address concerns and improve transparency. As stablecoins play a vital role in facilitating transactions and providing stability in the crypto space, maintaining trust in their reserves is crucial for market confidence.