Tether quietly updates its collateral breakdown, which includes 'cash equivalents' and third-party loans
Tether has made a discreet bid to face off scrutiny over its stablecoin USDT, updating its website to clarify how its reserves are made up.
The company now claims that each coin is backed by "reserves, which include traditional currency and cash equivalents and, from time to time,...other assets and receivables from loans made by Tether to third parties."
Tether previously said the coin was 100% backed by an equal number of U.S. dollars in reserve. In December, Bloomberg vouched that Tether essentially had a dollar for every USDT on the market, after reviewing parts of its financial auditing records suggesting it had billions in fiat in offshore accounts.
"USDT is now officially not backed 100% by USD", one Reddit commentator said. Others speculated that it could mean the coin is actually backed by other crypto.
The wording update could be related to the Commodity Futures Trading Commission's subpoena against Tether as part of its ongoing investigation.
Amid the backlash and the rise of competitors, in December 2018 The Block found that Tether was losing dominance, dropping to a three-year low of total stablecoin supply, making up 73%; down from 98%.
This article has been updated with a statement from a Bitfinex spokesperson who sent The Block the following:
“From time to time, Tether reviews its Terms of Service and Risk Disclosures to ensure that they remain appropriate and up to date. Our most recent revisions were intended to update our disclosures to reflect Tether’s growth and operations and to be consistent with the types of disclosures used by other institutions.
These changes were made several weeks ago and were directly communicated to Tether’s customers logging into the site. This was done by way of scrollwrap with new terms of service that required active consent.
Tethers remain completely stable and 100% backed, so Tether’s reserves always equal or exceed the number of issued Tethers. The only change is that the composition of the assets that provide that backing includes a combination of cash, cash equivalents, and may also include other assets or receivables from loans issued by Tether.”
