Tether’s latest disclosure wasn’t pie charts — so we made our own

Tether released a new report on Monday that shows it relying far more on Treasury bills to give its maverick stablecoin its $1 value.

Tether released a new report on Monday that shows it relying far more on Treasury bills to give its maverick stablecoin its $1 value.

The report, issued by Cayman Islands-based accounting firm Moore Cayman, shows exactly what backed USDT as of June’s end.

Moore Cayman’s “assurance opinion” included a statement from Tether’s Paolo Ardoino, which said the company’s “conservative portfolio” has “an emphasis on liquidity” that fuels “growth and confidence.”

Also noticeable was the doubling of civil litigation that Tether faces, with total cases going from two to four.

Overall, Tether’s assets and liabilities jumped from $41 billion to $62 billion since the March disclosure, a growth rate of 50% in less than three months. 

Tether loves Treasury bills

Tether’s Treasury bills (effectively US government bonds) went from $900 million in March to over $15 billion as of June 30.

In terms of overall weight, that represents a 22% weight increase in the company’s Treasury bills in three months.

Still, the ever-present thorn in Tether’s side — commercial paper — also grew, from $20 billion in value to $30 billion. 

Unlike in March, Tether didn’t directly disclose explicitly how much cash backs USDT, instead lumping it with ‘bank deposits.’

Commercial paper (corporate debt) still makes up about half of the assets backing USDT, and Moore Cayman says 48% of it is graded ‘A-1’ and above.

But when compared to the rest of its portfolio, Tether now gives 0.52% less weight to commercial paper than in March.

In fact, while most asset classes that back USDT grew in terms of raw dollars — almost every one decreased in overall portfolio weight, all in favor of Treasury bills.

Half a billion in poorly graded paper

The report was filled with notes and fine print (and this time didn’t include pie charts). 

For instance, Moore Cayman noted the “average duration of time” (how long it’s held for) of Tether’s commercial paper is 150 days, and the average rating is A2.

Not to mention, nearly $500 million of Tether’s commercial paper is rated less than AAA — we don’t know how low on the credit rating totem pole these assets go.

It’s also still unclear which companies issued Tether its commercial paper.

Another curious detail is that Tether had custodied roughly $150 million in gold for Tether Gold (the gold-backed Tether stablecoin).

But Moore Cayman lumped that $150 million into a $4.8 billion category that included other assets like corporate bonds and funds.

Tether just printed $1B

Ultimately, this provides a more detailed breakdown of assets and liabilities than in March, and it likely meets the standards set out by the settlement reached with the NYAG in February. 

Tether did however promise an audit before the end of year. 

Whether this level of transparency affects USDT’s chances in matching the recent growth of main competitor USDC remains to be seen.

USDC’s parent company Circle hopes to go public in the US.

[Read more: Tether execs stumble through CNBC interview, say audit ‘months’ away]

In any case, just as Bitcoin rallied past $46,000 for the first time in months, Tether rallied too.

The firm printed another $1 billion in USDT for distribution via TRON on Monday — the first mint since March.

Edit 18:46 UTC, Aug 10: Clarified cash context in caption of pie chart.

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