Tether shifts the bulk of USDT collateral into US Treasuries

The bulk of USDT collateral is in US Treasuries. Over the past six months, the stablecoin issuer Tether has reduced its holdings in private securities, Bloomberg reports, citing the company’s chief technology officer Paolo Ardoino.

According to him, the share of collateral in private securities “continues to decline.” He explained that this reserve structure allows the company to quickly meet its obligations to redeem USDT.

“The worst-case scenario is that Tether simply becomes smaller,” the CTO added.

On May 12, against a backdrop of a crypto market rout, the price of USDT briefly lost parity with the US dollar. Ardoino stressed that the company had no trouble meeting its obligations — in the last 24 hours it bought back assets worth $600 million.

According to him, the collapse of the algorithmic stablecoin UST was driven by the asset’s exceptionally rapid growth. Because of this, Terra could not guarantee fund recovery in the event of declines in cryptocurrency prices.

Ardoino also said that UST was mainly a yield-farming instrument in the Anchor protocol. In his view, this was another reason for the ecosystem’s collapse, as the asset lacked real use cases.

In March, media reports surfaced that the American hedge fund Fir Tree Capital Management took a “significant” short position against USDT. The fund allegedly counted on a fall in the value of assets in the stablecoin issuer’s reserves.

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