Tether under pressure to disclose full breakdown of USDT reserves

As Tether came under renewed pressure to disclose a full breakdown of its reserves, USDT market cap dropped to levels unseen since September 2021.

Tether CEO Paolo Ardoino told Euromoney the company was preparing a “full” audit of its reserves, working with an auditor in the top 12, but not the top four.

Pressure has been mounting on Tether to reveal more details about its reserves following the publication of the draft of the Lummis-Gillibrand sweeping crypto bill. If the bill passes, all stablecoins in circulation in the United States will require at least 100% liquid reserves.

Meanwhile, rumors spread of Tether’s reserves being disproportionately based on low quality Asian commercial papers, a form of unsecured debt corporations often use to finance short-term liabilities.

Tether denied those rumors in a blog post, adding that “over 47% of total USDT reserves are now US Treasuries” and that the company’s commercial paper portfolio would be reduced to 8.4 billion by the end of June.

The question of Tether’s reserves resurfaced as USDT reeled from a sharp drop in market cap, the first plunge since the depegging of UST and collapse of LUNA (now referred to as LUNC) gave rise to fears that USDT could follow in UST’s footsteps, triggering a USDT sell-off.

USDT market cap chart showing a 17% plunge
90-day USDT market cap chart. Source: CoinGecko

Before UST depegged, USDT market cap sat at just over $82 billion. By late May, it reached a $72.5 billion mark. Last week, that level was breached again, with USDT falling to approximately $68 billion. In total, over the last two months Tether market cap dropped 17%.