Tether increasingly backed by US government bonds

Last Updated: 4 October 2022

US treasury bonds account for 58.1% of the reserves behind stablecoin Tether. This was reported by Tether’s chief technology officer Paolo Ardoino on Monday.

Expanding the share of US government bonds is part of the plan to “improve the quality of reserves”. On 30 September, holdings of commercial debt securities were reduced to less than $50 million. While shares of US treasury bonds rose by over 14%.

Tether announced in May this year to reduce its exposure to commercial debt securities. The trigger was the collapse of stablecoin TerraUSD. In May, that exposure to it was a whopping $19.9 billion. Three months later, however, this had already been reduced to $8.5 billion in favour of more US government bonds, which are generally considered less risky as short-term loans.

Last Thursday, Binance converted all existing balances and new deposits of stablecoins USDC, USDP and TUSD to its own stablecoin, BUSD. Trading pairs of these three stablecoins with BUSD and Tether (USDT) have also been discontinued, as with the two largest cryptocurrencies bitcoin and ether.

According to analysts at JPMorgan, this is good news for Tether, as it means less competition and perhaps more trading volume for Tether. After all, every transaction with Tether also makes the company behind it money.

Author

  • Ivan came across the topic of cryptocurrencies in early 2016 and, as an author and enthusiast, has been intensively involved with the topics of cryptocurrencies, blockchain and STOs ever since.

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