Stablecoin operator Tether Holdings has moved more than $4.5 billion out of banks in Q1 2023, significantly reducing counterparty risk, according to its latest attestation by BDO Italia. Despite this, Tether’s market capitalization grew from $66 billion to over $82 billion during the same period.
Tether has decreased its bank deposits by over 90%, bringing the total down to $481 million from $5.3 billion. The remaining deposits are now spread across multiple banks, a strategic move to mitigate potential losses from recent bank failures affecting its competitors.
To strengthen its reserves, Tether increased its holdings of United States Treasury bills to over $53 billion, accounting for 64% of its reserves. With other assets included, Tether’s USDT token is now backed by 85% cash, cash equivalents, and short-term deposits that can be easily liquidated for redemption purposes. The attestation also revealed Tether’s ownership of gold and Bitcoin, demonstrating its commitment to transparency.
Tether highlighted its financial achievements by surpassing the profits of notable companies such as BlackRock, Netflix, Starbucks, Cash App, and PayPal in the first quarter. The company’s strong performance was attributed to high yield rates and its surplus reserves.
Tether, a stablecoin owned by iFinex based in Hong Kong, has faced scrutiny and allegations regarding its financial operations. Rumors circulated about Tether’s substantial investments in Chinese commercial paper during the financial crisis faced by the China Evergrande Group.
The settlement not only imposed the fine but also mandated increased financial transparency from the stablecoin issuer.
These challenges have contributed to a heightened focus on Tether’s operations and the need for the company to address concerns regarding its financial practices and provide greater clarity regarding its reserves.
Stark pointed out that Tether promised to commission a full audit within “months, not years” in 2021, which still has not happened.
