WSJ on Tether CP Reserves
"Tether Says Massive Reserves Held in Investment-Grade Commercial Paper" writes The Wall Street Journal. The piece tells us, "Tether Holdings Ltd. released the most detailed version yet of the assets backing its widely used digital currency, seeking to address regulatory concerns that it hasn't previously disclosed enough about the currency's underpinnings. Tether is a stablecoin, a type of cryptocurrency designed to mimic the value of the U.S. dollar.... Traders use tether to get in and out of other cryptocurrencies because of its ease of use and quick transaction times. Trading directly between the dollar and digital currencies often involves high transaction costs and delays in processing. Using tether as a stand-in for the U.S. dollar allows cryptocurrency traders to buy and sell digital assets such as bitcoin quickly and with little fuss. The peg to the U.S. dollar is meant to give assurance that a tether is as safe as owning dollars." The Journal explains, "Tether is used across different cryptocurrency exchanges and trading platforms, making it a widely accepted way to fund trading positions or to post as collateral for risky, leveraged investments. Roughly half of Tether's $62.8 billion in assets were held in commercial paper and certificates of deposit, according to a report the company published Monday. It detailed for the first time the credit ratings of these notes, saying that about 93% of them were rated A-2 or higher, indicating an investment-grade, short-term rating. It said most of the assets were rated by Standard & Poor's where available. It also relied on ratings from Fitch Ratings and Moody's Corp. The report said that 24% of its assets were in Treasury bills -- considered among the safest to hold -- up from about 2.2% detailed in May. The other roughly quarter of the reserves are held in a mix of corporate bonds, cash and small deposits. Each tether coin is pegged at $1. In an appendix to the report, Tether's Cayman Islands-based auditor, Moore Cayman, said that Tether's reserves for its digital assets issued exceeded the amount required to redeem them. The composition of the reserves backing tether has long been a topic of debate. Earlier this year, Tether settled a nearly two-year investigation by the New York attorney general's office into it and the operator of the Bitfinex cryptocurrency exchange. Alongside the settlement, Tether agreed to publicly release quarterly statements detailing its reserves."
