Tether Announces It Has Eliminated Commercial Paper From Reserves

Tether, the stablecoin issuer, has removed the commercial paper from its reserves and says it has raised its direct exposure to US Treasury bonds by more than $10 billion in the previous quarter.

According to a series of tweets from the company, the action has resulted in the elimination of more than $30 billion in commercial paper with no losses.

For months, Tether has stated that it intends to improve the quality of its reserves, in part by lowering the quantity of commercial paper it owns. Tether says that its tokens are backed by the company’s reserves and are tied one-to-one with a corresponding fiat currency.

The move comes months after the Terra crisis, in which the company’s algorithmic stablecoin failed in May.

Stablecoins, which are primarily linked to the US dollar but may also be pegged to other fiat currencies and assets such as gold, are useful for cryptocurrency traders because they allow them to swiftly initiate and exit deals for other cryptocurrencies without the need for actual cash.

Rumors arose earlier this year that a component of Tether’s commercial paper portfolio was 85% backed by Chinese or Asian commercial papers and was trading at a 30% discount.

Tether, on the other hand, refuted this, alleging that the allegations were made up to create extra fear in order to profit from an already strained market.

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