Author: Hu Tao, Chain Catcher

announcedannouncedThe comprehensive reserve report for the fourth quarter of 2021 shows that the company's total assets are 78.67 billion US dollars, while the liabilities related to digital tokens are about 78.53 billion US dollars, and it is stated that the comprehensive assets exceed its comprehensive liabilities to prove that USDT has sufficient asset reserves .

Starting in February 2021, Tether must disclose its reserves quarterly as part of an $18.5 million court settlement with the New York Attorney General's Office. This is the third time Tether has released a reserve report since last year.

Since the reserve report published in September last year, the composition of Tether's reserves has undergone significant changes. Commercial paper and time deposit certificates fell by about 21% to $24.16 billion, and cash and bank deposits fell by 42% to $4.187 billion. The fund's allocation increased 200% to $3.0 billion, and U.S. Treasury bills also rose 77.6% to $34.52 billion.

The report also revealed that Tether’s $13.93 billion worth of commercial paper has maturities ranging from 0-90 days, $9.94 billion has maturities ranging from 91-180 days, and $823 million has maturities ranging from 181 to 365 days.

Tether initially unified the above assets into cash and cash equivalents and other short-term deposits and commercial paper, totaling approximately US$65.8 billion (accounting for 83.7%). In addition, secured loans (not provided to affiliated entities) were about $410 million, corporate bonds, funds and precious metals were about $3.62 billion, and other investments (including digital tokens) were about $5.02 billion.

In contrast, in the USDC reserve report disclosed by Circle in July last year, in addition to cash and U.S. Treasury bonds (72.8%), there are also U.S. dollar certificates of deposit (13%), commercial paper (9%), and corporate bonds in the $22 billion reserve. Bonds (5%), municipal bonds and U.S. agency bonds (0.2%).

However, in August, Circle stated that considering community sentiment, commitment to trust and transparency, and the changing regulatory environment, it announced that it would hold USDC reserves entirely in cash and short-term U.S. Treasury bonds. The Hong Kong initiative is being implemented and will be reflected in Grant Thornton future proof. At present, Circle has not disclosed any further information.

In contrast, Tether’s reserve assets include about $410 million in secured loans and $5.02 billion in other investments, including digital tokens, asset types that Circle does not have and are also considered high-risk asset type. Tether also stated that digital assets are valued at the lower of cost or fair market value.

Commercial paper, also considered a risky asset, is typically issued by large corporations to finance wages and short-term liabilities. Circle decided not to hold this type of asset precisely because of the outside world’s doubts about this type of asset. Although the commercial paper assets held by Tether fell by more than 21% this quarter, they still accounted for 30.7% of the overall reserve assets.

An investigative article published by Bloomberg in October last year also pointed out that Tether’s commercial papers include billions of dollars in short-term loans to large Chinese companies, and bitcoin-backed loans worth billions to other encryption companies. USD loans, one of which is Celsius Network.

In this regard, Tether's lawyer Hoegner said that the vast majority of its commercial paper has received high ratings from credit rating companies, and its secured loans are low-risk because borrowers must come up with bitcoins that are more valuable than their loans.

The report also revealed that Tether is a defendant in three ongoing legal cases.

At present, the total circulation of USDT is 79.4 billion pieces, which greatly reduces the number advantage over USDC. Specifically, the current circulation of USDC is 52.7 billion, that of BUSD is 18.3 billion, that of UST is 12.2 billion, and that of DAI is 10.1 billion.