Tether holds $72.5B worth of US Treasury bills, with excess reserves of $3.3B.

Tether holds $72.5B worth of US Treasury bills, with excess reserves of $3.3B.

The Growing Strength of Tether: Tether Holdings’ Q2 Attestation Reveals $3.3 Billion in Excess Reserves

Tether, one of the leading stablecoin providers in the blockchain industry, has released its Q2 attestation, shedding light on its treasury reserve holdings and indirect exposure to United States Treasurys. The report, conducted by accounting firm BDO, showcases Tether’s continuous effort to bolster its excess reserves, which witnessed an impressive $850 million increase, bringing the total to $3.3 billion.

Indirect Exposure to United States Treasurys

For the first time, Tether Holdings has disclosed its indirect exposure to United States Treasurys, revealing that its stablecoins are backed by approximately $72.5 billion worth of US T-Bills. This exposure includes both the Treasurys held by money market funds and those collateralizing Tether’s overnight repo.

To put this into perspective, Paolo Ardoino, Tether’s Chief Technology Officer, drew a fascinating comparison at Money2020 in Amsterdam. He highlighted that Tether’s US Treasury bill holdings rival the amounts held by sovereign nations like Mexico. This massive indirect exposure to US Treasurys speaks to the strength and stability of Tether’s stablecoins in the market.

Building Reserves and Addressing Weak Points

Tether’s decision to allocate company profits to build up excess reserves comes in response to recent failings in the cryptocurrency industry, such as the collapse of FTX and the bankruptcy of cryptocurrency lending firms like Three Arrows Capital. By creating a large excess reserve, Tether aims to strengthen its position and reinforce its commitment to transparency and reliability.

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In Ardoino’s words, “We believe that open communication and strong financials foster trust and reliability, and this is what the global community deserves, especially in a year devastated by many failures across the banking and crypto industry.” Tether’s dedication to maintaining a robust financial position is not only a testament to its commitment to its users but also a demonstration of its intent to support the entire cryptocurrency ecosystem.

Impressive Financial Performance and Liquidity

Tether’s Q2 report showcases impressive financial performance, with the company reporting operational profits of $1 billion from April to June 2023. This represents a substantial 30% increase from Q1 2023, primarily driven by the recent consolidation of Bitcoin (BTC) around the $30,000 mark.

Moreover, Tether’s attestation report reveals that 85% of its reserves are held in “liquid” investments, such as cash or cash equivalents, ensuring high levels of liquidity. With a total estimated value of $86.4 billion in assets and outstanding liabilities of approximately $83.17 billion related to circulating USDT tokens, Tether has positioned itself as a reliable and solvent player in the cryptocurrency market.

Share Buyback and Energy-Related Investments

As part of its efforts to strengthen its group, Tether’s shareholders have committed to a $115 million share buyback program. This initiative aims to enhance the company’s overall structure and further solidify its financial position.

Additionally, Tether’s Q2 report reveals that profits from the second quarter have been directed towards “other investments in energy-related initiatives.” While these energy-related investments are not included in the attestation report as suitable reserves for circulating tokens, they demonstrate Tether’s commitment to supporting sustainable and innovative projects within the blockchain industry. Cointelegraph has reached out to Tether for further clarification on whether this investment refers to its recently announced $1 billion investment in El Salvador’s renewable energy project.

Conclusion

Tether Holdings’ Q2 attestation highlights its continuous effort to strengthen its financial position and provide transparency to its users and the wider cryptocurrency community. The significant increase in excess reserves, combined with the impressive financial performance and indirect exposure to US Treasurys, positions Tether as a reliable and stable player in the blockchain industry. As Tether continues to navigate the ever-evolving landscape of cryptocurrencies, its commitment to openness, strong financials, and support for energy-related initiatives sets a valuable example for the industry as a whole.

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