Tether, the world’s largest stablecoin, has published its newest attestation, which claims that it’s making nearly $1 billion each quarter in returns from its reserves. This is apparently driven by the increase in rates for its large treasury holdings, with a claimed $56.6 billion in exposure to US treasuries.
These claimed profits have allowed the company to perform the accounting trick of moving its secured loans to ‘excess reserves’ which Tether seemingly believes are not part of the reserves, despite the name.
In December of last year, Tether stated that “throughout 2023, it will reduce secured loans in Tether’s reserves to zero.”
Tether’s description of its reserves now attempts to exclude secured loans it’s still engaged in by reclassifying them as ‘excess reserves,’ allowing it to maintain billions in secured loans while claiming it’s reducing exposure to zero. A recent Tether blog post includes a ‘Consolidated Reserves Forecast’ for today, which shows $4.3 billion in its loans being moved to ‘excess reserves,’ which according to Tether, is not part of its reserves.
A Wall Street Journal article quoted Alex Welch, who it claimed was a Tether spokesperson, as saying that Tether had continued the program due to “short-term loan requests from clients.” This prompted the company’s chief technology officer Paolo Ardoino to disclaim both the reporting and Welch via social media.
Outside of maintaining these billions in secured loans, Tether has been a very active investor recently, with deals in energy, artificial intelligence, staking, mining, and more. Tether also claims, “These investments are not considered part of the reserves backing the issued token.”