Tether Keeping Promise - BDO Italia Attestation Shows 58% Drop in Commercial Paper Exposure and More
In a step toward greater transparency and better alignment with international accounting standards, stablecoin operator Tether Holdings Limited has tapped BDO Italia to conduct regular reviews and attestations of its dollar reserves. Tether, which operates the USDT stablecoin, officially began working with BDO Italia in July, the company disclosed on Thursday. BDO Italia will be responsible for conducting an independent review of Tether’s stablecoin reserves to ensure that each unit of USDT is backed by cash or cash equivalents. Through BDO’s reviews, Tether aims to release public attestation reports monthly instead of quarterly. The attestations will include updates about the number of USDT tokens issued as well as the company's reserves.
[Bourgi, S. Tether reserve attestations to be conducted by major European accounting firm. (Accessed August 20, 2022)].
Merely one day after announcing BDO Italia being the firm to review Tether's reserves, etc. the first attestation was released yesterday, August 19, 2022, assessing Terra's assets as of June 30, 2022. "Tether had previously announced a commitment to decreasing its commercial paper holdings by the end of August 2022. Data from the report revealed a 58% decrease in commercial paper exposure since the previous quarter from $20 billion to $8.5 billion" [Fortis, S. Independent Tether attestation reveals 58% decrease in commercial paper holdings. (Accessed August 20, 2022)].
"The chief technology officer of Tether, Paolo Ardoino, tweeted that Tether has plans to continue to decrease its commercial paper holdings to $200 million by the end of August and zero them out by the following October" [Id].
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Additionally, "[t]he BDO Italia report breaks down the assets that, by June 30, 2022, they were in possession of Tether, being $66.409 million US dollars, with $66.218 million US dollars in liabilities, Tether emphasized that its assets are greater than its liabilities" [Weasels, F. Tether commercial paper holdings are down 58%. (Accessed August 20, 2022).
The company says these reports, specifically with the oversight of BDO, are to 'reinforce its dedication to transparency.' Ardoino commented on the attestation, saying: 'The utility of Tether continues to be supported by the transparency of its reserves and has been a leading source of stability, allowing us to build a tool for the global economy.”
[Fortis, supra].
Ardoino, also stated: "[...] his company’s pledge to offer more transparency reflects its growing mandate beyond just offering liquidity to crypto traders: 'The utility of Tether has grown beyond being just a tool for quickly moving in and out of trading positions, and therefore it is mission-critical for us to scale alongside the peer-to-peer and payments markets.” [Bourgi, supra].
In researching this article I found an interesting comparison of Tether's assets as of March 31, 2022 and its assets per BDO Italia as of June 30, 2022, as follows:
[The] tether reserves for March 31, 2022
Cash and Cash Equivalents US$70,585 million (Represented 85.6% of asset holdings): It was distributed as: 55.5% US Treasury Bills, 28.4% Commercial Paper, 9.6% Money Market Funds, 5.8% Cash and bank deposits, 0.15% Reverse Repurchase Agreements and 0.41% Non-US Treasury Bills.
Corporate Bonds, Funds and Precious Metals $3,729 million US dollars (Represented 4.5% of asset holdings)
There were $4,959 million US dollars in Other Investments (Representing 6% of holdings)
Secured loans $3,149 million US dollars (Represented 3.8% of holdings)
There were US$82.424 million in assets as of March 31, 2022.
While, As of June 30, 2022, according to BDO Italia, asset holdings were distributed as follows:
Cash and Cash Equivalents US$52,876 million (Representing 79.6% of asset holdings): It was distributed as: 54.5% US Treasury Bills, 15.8% Commercial Paper, 12.8% Money Market Funds, 10, 2% Cash and Bank Deposits, 5.6% Reverse Repurchase Agreements and 0.7% Non-US Treasury Bills.
There were in Corporate Bonds, Funds and Precious Metals $3,486 million US dollars (Represents 5.2% of asset holdings)
There were $5,551 million US dollars in Other Investments (Represents 8.3% of holdings)
There were $4,494 million US dollars in Guaranteed Loans (Representing 6.7% of holdings)
There were US$66.409 million in assets as of June 30, 2022.
Report of Assets belonging to Tether. Font: BDO Italy.
Therefore, Tether reports a decrease in the holding of assets that support USDT of 19% in March – June 2022. However, despite this, the total liabilities for the issuance of digital tokens are $66.204 million dollars and , therefore, are covered by the assets.
[Weasel, supra].
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