Tether's latest audit report: $66.4 billion in reserves, commercial paper exposure reduced by nearly 58%

Tether released its latest quarterly assurance opinion on USDT reserves yesterday.

Quarterly assurance opinions are a way for stablecoin issuers to assure the market that their stablecoins are backed by real assets. It involves evaluating and analyzing different operations, processes, and procedures.

Officially, USDT is backed by the U.S. dollar, which means that holders can redeem their holdings for an equal amount of U.S. dollars at any time, provided that Tether has sufficient cash reserves.

USDT has a market capitalization of $67.5 billion and is the third-largest cryptocurrency after Bitcoin and Ethereum. Due to its importance in the industry, Tether's reserves have always been closely watched.

The latest independent certification report, completed by Tether’s new auditing firm BDO Italia, breaks down Tether’s assets as of June 30, 2022 and asserts that the consolidated total assets are at least $66,409,619,424.

Tether stressed that its consolidated assets exceeded its consolidated liabilities, which totaled $66,218,725,778.

In addition, the report shows that Tether holds $28.9 billion in U.S. Treasuries, $6.8 billion in money market funds, $5.4 billion in cash and bank deposits, nearly $3 billion in reverse repurchase agreements and $397 million in non-U.S. Treasury bonds.

“We are fully committed to maintaining our role as the leading stablecoin in the market,” Tether CTO Paolo Ardoino said in a statement. “Tether’s utility continues to be supported by the transparency of its reserves and has been a major source of stability, allowing us to build a tool for the global economy.”

Tether’s exposure to commercial paper

The report also confirmed that Tether’s commercial paper holdings fell by more than 57.5% from $20 billion to $8.5 billion compared to the previous quarter. Tether said this is consistent with the company’s plan to reduce its commercial paper exposure to $200 million by the end of August 2022 and to zero by the end of this year.

The company also said its cash and bank deposits increased 32% during the reporting period.

Tether’s August 2022 Assurance Report, Source: Tether.

According to Tether’s first quarterly assurance report released in May, about 86% of the company’s reserves were in cash and short-term deposits, 4.5% in corporate bonds, 3.8% in secured loans, and 6% in “other investments ,” including “digital tokens.”

Commercial paper is a type of security issued by large corporations to pay short-term obligations such as inventory or wages.

Earlier this year, it was rumored that part of Tether’s commercial paper portfolio was “85% backed by Chinese or Asian commercial paper, trading at a 30% discount.”

Tether denied the claims, saying the rumors were intended to "create more profits in an already stressed market and cause further panic."

While Tether does not disclose which companies issued its commercial paper, yesterday’s report said that “the average ratings for commercial paper and certificates of deposit have improved and continue to be in the A-1 to A-2 range .”

Tether announced on Thursday that it has hired BDO Italia as its new audit firm to publish monthly certification reports on USDT reserves, thereby "providing considerable transparency to those holding Tether tokens."

However, many are still waiting for Tether to release an audit report from a “Big Four” accounting firm, rather than what the issuer of the USDT stablecoin calls an “assurance opinion.”