Tether released the most-detailed version yet of the assets backing its widely used digital currency, seeking to address regulator concerns that it hasn’t in the past disclosed enough about the currency’s underpinnings.
Tether is a stablecoin, a specific type of cryptocurrency designed to mimic the value of the US dollar. Its use has exploded in recent years and is the third most widely held cryptocurrency after bitcoin and ether.
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.
Roughly half of Tether’s $62.8bn 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, among the highest short-term credit ratings. 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.
The attorney general’s office said the companies made several public misrepresentations regarding the dollar reserves backing for tether in 2017 and a situation in 2018 when Bitfinex lost access to about $850m of its customers’ funds that it had placed with an outside company.
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This article was published by Dow Jones Newswires