Tether’s Excess Reserves Surpass $3.3 Billion, Backed by $72.5 Billion in US Treasury Bills

In its latest financial attestation for the second quarter of 2023, Tether Holdings revealed a substantial increase in its treasury reserve holdings backing the circulation of USDT tokens. According to the report published by the accounting firm BDO, Tether’s excess reserves experienced an $850 million surge, reaching a total of $3.3 billion.

For the first time, the company disclosed its indirect exposure to United States Treasurys through money market funds and U.S. Treasurys used to collateralize its overnight repurchase agreements. When combined, these holdings amount to approximately $72.5 billion, further reinforcing the backing for Tether’s stablecoins.

Speaking at Money2020 in Amsterdam, Tether’s chief technology officer, Paolo Ardoino, likened the company’s US Treasury bill holdings to those of sovereign nations like Mexico. The move to allocate company profits towards building excess reserves came in response to the collapse of FTX and other cryptocurrency lending firms like Three Arrows Capital. It’s important to note that the excess reserves do not include the 100% reserves that Tether maintains to redeem circulating USDT tokens.

Ardoino emphasized the significance of maintaining strong financials and open communication to foster trust and reliability within the global community, particularly after a year plagued by failures in both the banking and crypto industries.

Tether reported operational profits of $1 billion from April to June 2023, marking a 30% increase from the first quarter. This improved performance aligned with the overall surge in the cryptocurrency markets, primarily driven by Bitcoin’s consolidation around the $30,000 mark.

The Q2 report revealed that 85% of Tether’s reserves are held in “liquid” investments comprising cash or cash equivalents. The total estimated assets stood at $86.4 billion, while the outstanding liabilities related to circulating USDT tokens amounted to $83.17 billion.

As part of strengthening its group, Tether’s shareholders are planning a $115 million share buyback. Additionally, profits from the second quarter have been allocated to “other investments in energy-related initiatives.” However, these energy-related investments were not considered suitable reserves for circulating tokens and, therefore, were not included in the attestation report.

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