Tether, the company behind stablecoin USDT has issued a new assurance report today, months after releasing the first breakdown of its reserves. The stablecoin issuer has been under a lot of pressure regarding the transparency around its stablecoin reserves and hopes the new report could put an end to it.
Tether has always been fully backed and the assurance opinion made available today confirms it once again, and puts Tether ahead of the industry on transparency.https://t.co/2CLZTLXNjb
— Tether (@Tether_to) August 9, 2021
Paolo Ardoino, Chief Technology Officer at Tether, said:
“As an industry leader, we understand the importance of transparency and accountability. Our most recent assurance opinion from Moore Cayman again confirms Tether is fully backed. A healthy and conservative portfolio with an emphasis on liquidity continues to fuel our growth and confidence in our innovative offerings.”
The report revealed that 100% of USDT reserves are backed by commercial papers, cash, certificate of deposits, and bank balance. A total of $30.8 billion worth of reserves are backed by commercial papers while only 10% of all its reserves are backed by cash and bank deposits. While the 10% cash backing is considerably low, it is a 7% rise from the May breakdown that showed only 3% of the reserves were cash-backed.
The May breakdown of Tether reserves showed that 76% of USDT reserves were backed by cash or cash equivalent that included bonds and even Bitcoin. The two commercial papers published by the stablecoin issuer refute the company’s early claims of being 100% cash-backed.
Tether Feeling the Hear Amid Rising Competition
Tether-issued USDT had a market dominance of over 95% until last year, but as regulatory scrutiny increased along with the competition, it is slowly losing that dominance to the likes of Circle-issued USDC which has become the fastest-growing stablecoin this year.
USDC issuer Circle is also set to go public by the end of this year that would require it to submit quarterly audit reports of its reserves. Circle is increasingly working to become more transparent to gain dominance in the stablecoin market. The firm plans to release on-chain reports in the future as well.
As I shared just over a week ago, we are expanding our transparency on USDC Reserves. You can find the expanded table of reserves assets in our May attestation report: https://t.co/dYCFnnxG82
— Jeremy Allaire (@jerallaire) July 20, 2021
The changing regulatory climate in the US especially around stablecoins has made Tether rethink its strategy. The stablecoin war has intensified and USDT risks losing its market dominance over it if it doesn’t manage to redeem itself.