With $68 billion in assets, Tether is the largest stablecoin in the world. In order to improve the transparency of its USDT reserves, Thether will carry out a full audit with a top 12 accounting firm.
The decision was made at a time when USDT has been steadily losing market share due to a series of redemptions over the previous few weeks, which were partly prompted by a weakening in confidence following the failure of the Terra blockchain.
Tether, issuers of the USDT stablecoin, is currently working with a Cayman-based accounting firm called MHA. The corporation has only created attestations up to this point, which are snapshots of a company's balance sheet on a specific day.
Chief Technology Officer Paolo Ardoino said in an interview with Euromoney that Tether was currently working on providing a full audit, which, unlike attestations, would help give a complete picture of the company's financial position over a certain 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 come under pressure to disclose more information about the reserves that support USDT, an asset that is linked 1:1 to the US dollar. Advocates contend that disclosure would improve investor understanding of potential risks and disclose the relationship between the auditors and the company .
Tether has been a little more transparent about its bankers, but it has been coy about its USDT reserves, citing confidentiality. Ardoino said crypto assets accounted for a small proportion of Tether's reserves.
Furthermore, he claimed that over the previous eight months, Tether cut its holdings of commercial paper from $40 billion to $15 billion, allaying market worries about a potential risk in the firm's portfolio. Some of Ardoino's reserves, according to the company, have been transferred in securities with a three-month maturity.
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.
According to Euromoney, Tether is regularly updating the New York Attorney General Letitia James on its reserves and operations as part of a $18.5 million settlement and trading ban agreement reached in February of last year.
Ardoino claims that the USDT peg has never really broken
Following the high-profile collapse of the Terra blockchain in May, stablecoins have come under increased scrutiny in the weeks that followed. Tether's USDT temporarily lost parity with the dollar during the commotion, falling to $0.95 as investors left the stablecoin in panic.
After the company paid users the equivalent of $1 to redeem their USDT holdings, according to Ardoino, USDT never de-pegged. Ardoino compared the current chaos to the 2008 bank run on Washington Mutual and 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.”
According to Coinmarketcap, Tether's total market capitalization has tumbled by more than $10 billion since early May.
