Tether promises to test in “several months” as Paxos claims USDT is not a true stablecoin

According to the project’s General Counsel, there will be an official test of the world’s most popular stablecoin, Tether, within a few months.

An audit for the world’s third largest digital asset has been expected for several years, and increasing regulatory pressures appear to have accelerated the process.

In a rare mainstream media interview on CNBC, Tether CTO Paolo Ardoino and General Counsel Stu Hoegner were asked some urgent questions about USDT support and transparency.

Hoegner answered the question with the words:

“We are working on a financial due diligence that no one else in the stablecoin field has done before.”

Hoegner added that the company hopes to do this first and that the audits will be in “months, not years”. He claims that Tether is one-to-one hedged with its reserves, but admits that those reserves are not all US dollars. Tether’s reserves weigh heavy in dollars, according to Hoegner, but they also include cash equivalents, bonds, secured loans, crypto assets, and other investments.

The current market capitalization of USDT is 62 billion, according to Tether’s transparency report. It has grown 195% since the start of the year but is lagging behind rivals USDC and BUSD in terms of growth rate.

Connected: Coin Metrics Co-Founder Targets Tether FUD. from WSJ

Circle released its own reserve disclosure report on July 21st, which found that 61% of USDC’s reserves are held in cash and cash equivalents, with the remainder in commercial paper accounts, silver and bonds.

Paxos do swipes

In a related development, rival stablecoin firm Paxos struck both Tether and Circle in a blog post on July 21, claiming that they are “not fully monitored by any agency” or financial regulator.

“Neither USDC nor Tether are regulated digital assets for the simple reason that neither token has a regulator. In fact, neither USDC nor Tether tokens are “stablecoins” in anything other than name. “

Paxos announced that 96% of its own stablecoin reserves are cash or cash equivalents.

Tether first announced the collapse of its USDT support in May after scrutiny by U.S. lawmakers. The company has been reporting on its reserves on a regular basis since reaching an agreement with the New York attorney general in February.