Tether Eliminates All Commercial Paper Holdings to Zero

Tether Limited Inc., the company behind USDT stablecoin, announced on Thursday that it has reduced its commercial paper holdings to zero, replacing them with U.S. Treasury bills.

Commercial paper is a short-term, unsecured debt issued by companies, whereby the value of the paper depends on the issuing company. Commercial papers are normally considered less reliable or less stable than other debt instruments like U.S. Treasury bonds.

On Thursday, Tether disclosed that it has now eliminated all commercial paper from its reserves. The firm said it has cut down more than $30 billion of commercial paper without any losses and increased its direct exposure to U.S. Treasuries by more than $10 billion in the last quarter.

The USDT stablecoin issuer said the move is part of the company’s “ongoing efforts to increase transparency” and back its tokens with “the most secure reserves in the market” — in hopes to ensure investor protection. “Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market,” Tether tweeted on Thursday.

The tweet noted that zeroing out the balance of its commercial paper holdings was not only made to be a step toward greater transparency and trust for the company but also for the entire stablecoin industry.

Currently, there are about 68.4 billion tether tokens in circulation, meaning that USDT has a market capitalization of $68.4 billion.

Earlier this month, as reported by Blockchain.News, Tether reported that it reduced its commercial paper holdings to less than $50 million. As of September 30, the firm announced that it increased its U.S. Treasury holdings to 58.1% of its total portfolio from 43.5% of its total portfolio as of June 30.

In the past, the company said that it would cut down its commercial paper holdings to zero by the end of the year due to rising concerns over the stability of the Tether ecosystem and its stablecoin, USDT.

Last year, New York regulators fined a multimillion-dollar against firm over concerns associated with the composition of its reserves. Since then, Tether has been committed to improving the quality of its reserves, in part by eliminating the amount of commercial paper it holds.