Stablecoin Issuer Tether Now Holds Zero Commercial Paper

Stablecoin issuer Tether has revealed that it now holds zero commercial paper after months of gradually reducing its commercial debt holdings for its reserve assets. 

The development comes less than two weeks after the company announced that it had reduced its commercial paper exposure to less than $50 million. 

• Commercial paper is an unsecured, short-term debt issued by companies. CP is generally more stable than U.S. treasury bonds.  
• According to today’s announcement, the commercial paper was replaced with U.S. treasury bills (T-Bills).
• Tether’s commercial debt holdings were worth about $30 billion as of July 2021 before going to zero without any losses, the firm claimed.

“Today, the goal to bring the figure down to zero has been fulfilled,” Tether said. 

• The company said the move is part of its effort to increase transparency and back its stablecoins with more secure and liquid reserves in the market. 

Reducing commercial papers to zero demonstrates Tether’s commitment to backing its tokens with the most secure reserves in the market. This is a step towards even greater transparency and trust, not only for Tether but for the entire stablecoin industry,” the firm added.

• Tether did not specify the percentage of T-bills in its portfolio in the latest update. However, on September 30, 2022, the company announced that its T-Bills investment was 58.1%.