The world’s biggest stablecoin issuer, Tether, has revealed its plans to publish real time data on the reserves backing $USDT.
The news was given by its recently appointed CEO, Paolo Ardoino, in an interview with Bloomberg on Thursday. He was promoted from being Tether’s chief technology officer, a position which he had been holding since 2017.
In its Q2 attestation, the firm had revealed holding $3.3billion of reserve assets in excess to back the value of its stablecoins. It also showcased the firm strengthening its reserves by injecting an additional $850million.
The report stated that the excess money added constituted profits not distributed to shareholders: “As a reminder, excess reserves are the company’s own profits – not distributed to shareholders and which the company has decided to keep on top of the 100% reserves that Tether maintains to back all the outstanding tokens.”
This came on the back of the 2021 allegation by the Commodity Futures Trading Commission (CFTC) where it claimed that $USDT was not fully backed for the majority of a 26-month period between 2016 and 2018.
The firm also received a $42.5m fine from the regulatory authority. CFTC’s press release had added that Tether commingled reserve funds with the company’s corporate funds and held reserves in non-cash products.
Furthermore, it said: “At various times, Tether maintained some of the Tether Reserves in bank accounts other than the Tether Bank Accounts. Tether represents that, at times, it also included receivables and non-fiat assets among its counted reserves; and further represents that Tether has not failed to satisfy a redemption request for tether tokens.”
Stablecoin issuers are required to hold a reserve equal to the number of tokens that they issue, maintaining a 1-to-1 backing. According to Tether’s most recent report, the reserves have now surpassed the total supply of its dollar-backed stablecoin $USDT. On top of this, the company’s total assets exceed its total liabilities as well.
When Tether released its recent reserves attestation, Ardoino, who acted as the CTO back then, expressed much pride in the company’s dedication to transparency. He said: “Transparency is not just a buzzword for us; it is the cornerstone of our philosophy. 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 command over the industry has also grown stronger since then, with its market capitalisation ballooning to $83.9bn. It regularly surpasses $30bn in daily trade volume too.
Ardoino’s promotion to the top position would replace the former CEO, Jean-Louis van der Velde, who will be transitioning into an advisory role. Talking about the change, Velde said: “Paolo is extremely well-suited to lead Tether into this exciting new era….I believe Tether is poised to continue its rapid growth, with a continued focus on emerging markets and transformative technology.
“I think I can speak for the entire company when I say that we eagerly anticipate Paolo’s leadership as he guides Tether toward a future where finance knows no bounds.”