Stablecoin firm Tether published its reserves attestation for Q3 2023, revealing its highest ever percentage of reserves held in cash and cash equivalents. The report signals Tether’s prudent financial management amid crypto market volatility.
Independent auditor BDO confirmed Tether’s consolidated assets continue to exceed its outstanding token liabilities as of September 30, 2023.
Tether also disclosed key details on its reserve composition and performance:
- Cash and cash equivalents comprised 85.7% of reserves, predominantly $72.6 billion in US Treasuries. This marked Tether’s highest cash allocation on record.
- The substantial liquid holdings showcase Tether’s focus on maintaining stability and its ability to reliably redeem USDT.
- Tether generated close to $1 billion in quarterly returns on its cash and equivalents investments, further benefiting its financial position.
Tether lowers risk by lowering secured loans
- Secured loans were cut by over $330 million in Q3, significantly reducing this riskier reserve component.
- Tether maintained $3.2 billion in excess reserves beyond its token liabilities, despite crypto price fluctuations impacting the value of its smaller bitcoin and gold reserve holdings.
- The company projects lowering secured loans to around $900 million by October month-end as excess reserves continue climbing.
Tether stated that its goal is to eventually remove secured loans from reserves completely by leveraging robust profits. They disclosed over $800 million invested this year in areas like sustainable energy, Bitcoin mining, P2P technology, and data.
They mentioned that these investments are not considered part of Tether’s token-backing reserves. The spending highlights Tether’s commitment to supporting crypto infrastructure, even amid down markets.
Tether CEO Paolo Ardoino cited the report as demonstrating the company’s dedication to transparency, stability, and prudent financial stewardship.
The surging cash allocation reinforces Tether’s liquidity and ability to maintain USDT’s dollar peg. Ongoing investments also showcase Tether’s efforts to build a more sustainable and inclusive crypto financial system.
By reducing riskier reserve components while generating strong returns on liquid holdings, Tether aims to reinforce market confidence in USDT amid volatility.