Tether Prepares Full Audit to Improve USDT Reserves Transparency

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Teth­er, the world’s largest sta­ble­coin with $68 bil­lion in assets, will under­take a full audit with a top 12 account­ing firm in order to improve trans­paren­cy of its USDT reserves.

The move comes as USDT has steadi­ly lost mar­ket share fol­low­ing a series of redemp­tions over the past few weeks, caused in part by weak­en­ing con­fi­dence after the col­lapse of the Ter­ra blockchain last month.

Teth­er, issuers of the USDT sta­ble­coin, is cur­rent­ly work­ing with a Cay­man-based account­ing firm called MHA. The out­fit has so far only pro­duced attes­ta­tions – a snap­shot of a company’s bal­ance sheet on a giv­en date.

In an inter­view with Euromoney, chief tech­nol­o­gy offi­cer Pao­lo Ardoino said Teth­er was now work­ing on pro­vid­ing a com­pre­hen­sive audit, which, unlike attes­ta­tions, would help give a com­plete pic­ture of the company’s finan­cial posi­tion over a spe­cif­ic period.

“I think its one of the top 12, so not that bad. The big four are a bit more cau­tious about pro­vid­ing a full audit when the rules are not clear,” Ardoino said, point­ing out that oth­er rival sta­ble­coins were still lack­ing in this respect.

Tether pressured to disclose USDT reserves

Teth­er has been under pres­sure to be more trans­par­ent about the reserves back­ing USDT, an asset pegged one-to-one to the U.S. dol­lar. Advo­cates argue that dis­clo­sure would help investors bet­ter under­stand poten­tial risks and deter­mine how audi­tors are inter­act­ing with the company.

While Teth­er has pro­vid­ed some clar­i­ty on its bankers, it has remained coy about its USDT reserves cit­ing con­fi­den­tial­i­ty. Ardoino said cryp­to assets account­ed for a small pro­por­tion of Tether’s reserves.

He also said Teth­er cut its hold­ings of com­mer­cial paper from $40 bil­lion to $15 bil­lion over the past eight months, sooth­ing mar­ket con­cerns about a risk in the firm’s port­fo­lio. Ardoino stat­ed some of its reserves have been trans­ferred into secu­ri­ties that mature with­in three months.

Teth­er is pro­vid­ing reg­u­lar updates on its reserves and oper­a­tions to the New York Attor­ney Gen­er­al Leti­tia James, as part of a deal on an $18.5 mil­lion set­tle­ment and a ban on trad­ing in Feb last year, Euromoney reported.

Ardoino says USDT peg never practically broken

Sta­ble­coins have come under increased scruti­ny in the weeks fol­low­ing the high-pro­file col­lapse of the Ter­ra blockchain in May. Amid the chaos, Tether’s USDT tem­porar­i­ly lost its par­i­ty to the dol­lar, drop­ping to $0.95, as investors exit­ed the sta­ble­coin in panic.

Ardoino claimed that, prac­ti­cal­ly, USDT nev­er de-pegged after the com­pa­ny paid users the equiv­a­lent of $1 to redeem their USDT hold­ings. Using the exam­ple of the 2008 bank run on Wash­ing­ton Mutu­al to explain the recent chaos, Ardoino said:

“We were put under a stress test that not even banks can suc­ceed, and we passed with fly­ing col­ors. We showed that in the worst case sce­nario, when there was Ter­ra crum­bling, the entire cryp­to mar­ket crum­bling, we got a tonne of request of with­drawals and we hon­ored them with­in minutes”.

He added: “Teth­er redeemed 10% of its assets in 48 hours and with­out the blink of an eye, we could have done much more than that. In total, in 10 days it was around $11 bil­lion or 13% of our assets and still no problems.”

Tether’s total mar­ket cap­i­tal­iza­tion has tum­bled by more than $10 bil­lion since ear­ly May, accord­ing to Coinmarketcap.

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