One article to understand the reserve mechanism of USDt
Recently, Moore Cayman, an accounting firm that specializes in providing audit services for investment funds and the digital asset industry, issued an audit report indicating that all tokens issued by Tether have sufficient reserve support. According to the data, as of June 30, Tether’s asset reserves included $30.8 billion in commercial paper and certificates of deposit, $6.28 billion in cash and bank deposits, $1 billion in reverse repurchase notes, $15.28 billion in treasury bonds, $2.517 billion in US dollar secured loans, US$4.831 billion in corporate bonds, funds and precious metals, US$2.055 billion in other investments (including digital currencies), totaling more than US$62.773 billion in asset reserves.
In response, Paolo Ardoino, chief technology officer of Tether, said:
"As an industry leader, we understand the importance of transparency and accountability. Our recent reassurance from Moore Cayman reconfirms that Tether is fully supported. A healthy, conservative portfolio focused on liquidity continues to drive the growth and Confidence in our innovative products."
So today, let's take a look at the relevant knowledge and calculation methods of the Tether reserve mechanism.
Tether has a full reserve fund and has not had any acceptance defaults since its creation. In fact, many Tether users have been using their own examples to prove Tether's ability to accept large amounts of funds. Every Tether in circulation has a 100% reserve fund to ensure acceptance. The reserve fund includes:
• Fiat currencies such as USD/EUR
• Cash and cash equivalents
• Digital assets
• Loans to third parties (including loans to related entities)
Many users will wonder whether Tether's borrowing mechanism on Bitfinex will cause insufficient reserves. In fact, Tether's initial loan to Bitfinex was $750 million. Bitfinex has been repaying the principal according to the plan (the actual repayment progress is faster than the plan), and paying the interest (the interest repayment speed is also faster than the plan), and the loan is in good condition. At present, Bitfinex's borrowing amount is 550 million US dollars, accounting for only about 2.5% of Tether's total market value.
In addition, rumors similar to "Tether has only 74% of reserves" are misinterpretations of Bitfinex's chief legal counsel Stuart Hoegner's statement, which does not conform to the actual situation. On April 30, 2020, in Tether's affidavit of litigation submitted to the New York Attorney General, Stuart Hoegner mentioned: "The cash and cash equivalents held by Tether account for approximately 74% of the value of Tether in circulation." In his submission In April 2020 as of this statement, Tether's total circulation was $2.1 billion. About 74% of the reserves are cash and cash equivalents, with the remaining 26% being loans from Bitfinex. In January 2021, Tether Chief Technology Officer Paolo Ardoino said in an interview that the total circulation of Tether has increased to 24 billion US dollars, and the proportion of loans in the reserve has dropped to about 2.5%. Tether still has 100% reserves.
