Tether maintains $3.3B liquidity buffer to ensure USDT stability
Tether, the issuer behind the industry’s largest stablecoin USDT, disclosed that it maintains a $3.3 billion liquidity buffer to ensure stability within the USDT ecosystem and foster trust among stakeholders.
Overall, the company holds assets totaling $86.1 billion, and its liabilities stand at $82.8 billion, indicating a reserve backing of over 100%. However, this figure is slightly lower than the consolidated total assets held by the company as of June, which amounted to at least $86.5 billion.
Tether had a stellar performance in the second quarter of 2023, with operational profits reaching $1 billion from April to June, a substantial 30% increase compared to the previous quarter. The surge was partly driven by the appreciation of Bitcoin price, which hovered around the $30,000 mark in the quarter.
Tether, which is owned by Hong Kong-headquartered Ifinex, also provided a breakdown of its reserves, as well as a complete list of USDT reserve custodians.
According to Tether’s recent reserves report, the company holds a surplus in shareholder capital cushion of $3.29 billion across 15 different blockchain ecosystems. With the exception of Algorand and Polygon, Tether has the authorization to issue USDT tokens in large quantities.
Among these ecosystems, Solana takes the lead with a pre-authorized issuance value of $1.57 billion, followed by Ethereum and Tron with pre-authorizations of $617 million and $353 million, respectively.
Tether hasn’t given any statement regarding how important it is to have pre-authorization for issuance in relation to transparency and trust.
However other stablecoins under Tether’s purview, such as Tether Gold (XAUT), Tether EURt (EURT), Mexican Peso Tether (MXNT), and Tether Chinese Yuan (CNHT), do not enjoy the same level of liquidity cushion as USDT. These stablecoins lack balances to maintain a 1:1 peg in times of crisis, as mentioned in the report.
Tether’s transparency report contradicts ongoing concerns about its liquidity and asset backing. While Tether faced a $41 million fine by the U.S. Commodity Futures Trading Commission in 2021 for sharing “untrue” statements about its reserves, recent transparency reports have not raised flags from authorities over the past two years.
Tether has switched the accounting firm that audits the massive reserves that back its USDT token to BDO Italia, the 5th largest accounting firm in the world. It officially began working with BDO Italia in July 2022 for its quarterly attestations. With this alignment, the issuer moved towards the release of its attestations from a quarterly basis to monthly reports.
