Tether announced that it recently reduced its holdings of commercial paper to zero. In lieu of commercial paper, Tether is increasingly backed by US Treasuries instead.
When Tether provided its first reserve composition breakdown in May last year, commercial paper made up almost half of its reserves. Indeed, it had quietly been a part of Tether’s claimed dollar reserves for years, with the CFTC settlement suggesting it began in August 2018. When the Financial Times attempted to track down Tether’s commercial paper, it noted that none of the major players in the market had noticed Tether’s entry.
Tether executives seem focused on improving the apparent quality of its reserves as discussion of stablecoin regulation in the United States continue to ramp up. Lawmakers are indicating a bill is still likely to come soon to more formally regulate stablecoins.
Ongoing efforts to reveal more detail about Tether’s reserves include a class action lawsuit alleging cryptocurrency market manipulation, and an ongoing freedom of information lawsuit in New York. However, it’s unclear if either effort will be successful or if the information about the reserves will ever be broadly available.