Tether vows to remove secured loans amid rush to show solvency

Quick Take

  • Stablecoin operator Tether intends to reduce secured loans in its reserves to zero in 2023. 

Tether intends to remove all secured loans from its backing in 2023 after The Wall Street Journal said that the stablecoin operator's increasing roster of loans might make it unable to pay back redemptions in the event of a crisis.

The company told the WSJ that its loans reached $6.1 billion, or 9% of Tether's total assets, as of Sept. 30. The group's consolidated total assets reached more than $68 billion in the third quarter. Tether claimed to make sure borrowers offer "extremely liquid" collateral for these loans, but now the operator plans to scrap them altogether. 

"Tether is professionally and conservatively managed, and this will be demonstrated once again by successfully winding down the lending business without losses — since all loans are over-collateralized by liquid assets," the company said in a statement. 

The news comes after the collapse of crypto exchange FTX, and as exchanges and other entities attempt to reassure markets that they are solvent. "Tether's reserves are extremely liquid with the majority of its investments, making up 82% of the total assets, being held in Cash & Cash equivalent and other short-term deposits," the company said on Nov. 10.


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USDT is one of the most popular stablecoins pegged to the U.S. dollar, making up 31.6% of the total Ethereum-based stablecoin supply, according to The Block's Data Dashboard. 

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions. 

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

MK Manoylov has been a reporter for The Block since 2020 — joining just before bitcoin surpassed $20,000 for the first time. Since then, MK has written nearly 1,000 articles for the publication, covering any and all crypto news but with a penchant toward NFT, metaverse, web3 gaming, funding, crime, hack and crypto ecosystem stories. MK holds a graduate degree from New York University's Science, Health and Environmental Reporting Program (SHERP) and has also covered health topics for WebMD and Insider. You can follow MK on X @MManoylov and on LinkedIn.


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