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"Forbes has learned that Tether moved $37 billion of its reserves to an offshore bank called Capital Union in 2021. The move occurred after settling with the New York Attorney General's office over claims it had misrepresented its finances. Tether also enlisted another Bahamian bank, Ansbacher, to hold some of its reserves. Tether has additionally been using New York financial services giant Cantor Fitzgerald as a custodian of U.S. Treasury bills. (Tether recently reported that more than half of its consolidated assets were in Treasuries last quarter.)"

Chinese importers in Russia are buying up to $30 million a day of tether from Moscow's OTC trading desks. They use the cryptocurrency to send large sums back to their home country, which has strict capital controls. Previously the merchants used bitcoin for this, but when the market crashed in 2018 they switched to tether. Despite longstanding questions about USDT's collateral, in this market "nobody actually cares if tether is backed or not," says one Moscow trader.

"What if Tether announced tomorrow that they don't want to enforce convertibility anymore, and oh by the way, "we don't really have a 1-to-1 reserve pool"? The company could keep issuing USDT as it sees fit, feeding the marketplace with enough liquidity to "keep it going". If indeed all USDT holders consider they have good reasons to hold Tether, because it helps them trade, there's is really no reason for them to dispose of it. A "Nixon shock" whereby Tether would announce it will not enforce the 1-to-1 parity anymore could be followed by a new rule of floating exchange rate. Would there be a fundamental problem with that?"

Tether is now one of the biggest money market funds in the world, holding more commercial paper than companies like Amazon and Google. According to JP Morgan analysts, although Tether might prefer the simpler solution of holding their USDT reserves with US banks, they have been pushed into a corner because of their limited access to such banks caused by their reputation for shady behavior, including, in the past, misrepresenting the sufficiency and quality of those USDT reserves. The kind of big banks that could accommodate a material portion of these reserves, including JP Morgan themselves, would likely steer clear of Tether due to reputational risk concerns.

Tether announced today the launch of USDT stablecoin transfers on the OMG Network, one of the first viable Ethereum Layer 2 scaling solutions. The launch will bring increased speeds and reduce transaction costs for Tether transfers, currently the number one source of transactions on the Ethereum network. If meaningful volume from Tether transfers shifts to the OMG network, it could generate a much needed reduction in the fees paid to interact with the Ethereum blockchain. The launch of OMG Network was a big step toward a more scalable Ethereum but its effects may not be felt just yet.

A Bloomberg article made numerous claims against Tether, including that its chief financial officer Giancarlo Devasini has used the company's reserves to make investments, that seem to contradict Tether's public position that the holdings were fully backed at all times. In addition, the article alleges that Tether has invested in Chinese firms and issued crypto-backed loans "worth billions of dollars." Furthermore, Wall Street traders were canvased to see if any had ever seen any trades made by the company, which supposedly holds $30 billion in commercial paper short-term loans - suggesting the fact that none had seen any should raise eyebrows. Additionally, only one bank was located - in the Bahamas - that was working with the firm. Tether called the article "another tired attempt to undermine" the company, pointing to its recent quarterly report on its holdings to demonstrate that it is 100% backed, although not offering any detail on its asset holdings that would concretely refute the Bloomberg article's contentions.

"Tether says in its terms of service that it only creates new stablecoin tokens, USDt, in acceptance for money. That is, to get $1 worth of USDt from Tether, you need to send it $1 in actual U.S. dollars. But in reality, Tether does not seem to be waiting for deposits to roll in before issuing new USDt. As the FT's Kadhim Shubber reports, it is directly lending new USDt out, much like how a bank puts new dollar IOUs into circulation by lending them out."

"For its next edition of the pie chart, Tether should consider catering to this demand by providing a long list of explanatory notes. Tether will be publishing its next pie chart sometime in the middle of August. Given its flagging issuance, Tether has every reason to do a better job than before. The whole cryptocurrency world will be watching."

Tether plans to reduce its holdings of commercial debt in its reserves, Chief Technology Officer Paolo Ardoino told CNBC. Tether holds short-term corporate debt but does not disclose from which companies, which has raised transparency concerns. But Ardoino said Tether, the issuer of the USDT stablecoin, will cut its holdings of commercial paper further than the current 30% of total reserves, and move the money to U.S. Treasurys.

"This is a quick post to share some of the things I've learnt from watching Tether over the last two months. I'm hoping other Tether watchers find this information useful and share some of their own Tether watching tricks in the comments section. (No conspiracy theories, please. Just analysis). "

Many industry participants have commented on how the gap in marketcap between Tether and its largest competitors has narrowed. However, the difference between USD₮'s 24hr trading volume and its competitors tells a clearer and more important story. For example, rather than catering to the traditional banking industry, Tether is focused on being the most used currency for peer-to-peer exchanges, remittances, a tool of freedom and inflation hedge for developing countries. This is why, while Tether's marketcap has decreased due to the billions of cash redemptions that it's effortlessly facilitated over the past several weeks, Tether's 24hr trading volume remains roughly 10x that of its closest competitor. This points to the utility of Tether in daily trading and is the true measure of adoption. The sheer scale of the integration of USD₮ into the financial plumbing of the crypto industry is an order of magnitude greater than its nearest competitor.

In a recent blog post, the world's largest stablecoin issuer Tether mocked its smaller competitor, Circle (which issues USD Coin), for being unprofitable. In Circle's first quarter of 2022, it was $113 million in the red, whereas according to JP Koning's estimates based on an analysis of Tether's six attestation reports, Tether earned $13 million over the twelve months ending March 31, 2022. Going forward, both Circle and Tether can be expected to earn much more interest income on their base of non-interest-paying customer deposits, but Tether may face losses on its possibly riskier investments, including $62.8 billion in the collapsed lender Celsius, which is probably worthless now.

Price discovery for bitcoin takes place in derivatives trades where tether serves as the margin and settlement currency. What trading of the dollar against the euro is to currencies, trading of bitcoin against tether is to crypto. On the Binance exchange, the pricing of reassuringly named perpetual swap contracts involving bitcoin and tether drives bitcoin prices in US dollars and more broadly influences prices across crypto... Without tether, or at least without stablecoins, it is not clear how the crypto complex functions. Problems with the vehicle currency would impair the liquidity of the whole crypto complex, just as the "dollar shortage" of late 2008 impaired the liquidity of the whole foreign exchange market. Less liquid assets are worth less. And if a prominent stablecoin becomes essentially a worthless entry on nobody's spreadsheet, it would suggest other crypto could go to zero.

"This suggests that Tether is in a contraction phase, just like USD Coin. But Tether's contraction is more muted, at least for now. USD Coin has shrunk by 11%. Using the quantity of Tethers in Tether's treasury wallet as our measure, Tether has contracted by only 4%."

Tether said in a new USDT attestation report that it made a $700 million net profit in Q4 2022. The company says it has added the money to its USDT reserves. Tether said its latest quarterly results were buoyed by interest rate hikes by the U.S. Federal Reserve, which have resulted in higher yields on government debt. Tether makes money from various fees, including a $1,000 withdrawal fee (with a minimum withdrawal requirement of $100,000), as well as investments in digital tokens and precious metals as well as issuing loans to other institutions. https://assets.ctfassets.net/vyse88cgwfbl/53L8YRM4ZHCEeqlpKbc3Q8/846eb5a7f53a47d53676ee3fbb1b3062/Std_ISAE_3000R_Opinion_BDO_31-12-2022_Tether_CRR.pdf

Tether has pledged to stop the practice of lending out funds from the reserves that back its USDT stablecoin. The move is likely in response to a Wall Street Journal report earlier this month alleging these loans were risky, claiming that the "company may not have enough liquid assets to pay redemptions in a crisis," even though Tether claims that the loans are over-collateralized and covered by "extremely liquid assets." Tether said that starting from now, throughout 2023, it will reduce secured loans in its reserves to zero.

Tether has released an attestation dated February 28, 2021 and delivered by accounting firm Moore Cayman that shows that its stablecoins are fully backed. However, the report doesn't describe how Tether's reserves are held. https://tether.to/wp-content/uploads/2021/03/tether-assurance-feb-2021.pdf

Tether announced further progress towards reducing its commercial paper portfolio. As of July 1, Tether had 8.4 billion of these holdings, of which 5 billion will expire on July 31. The goal remains to bring commercial paper holdings down to zero, switching them into short-term U.S. Treasury securities.

Tether has cash and cash equivalents (short term securities) on hand totaling approximately $2.1 billion, representing about 74 percent of the current outstanding tethers.

In the past, Bitfinex representatives have insisted to Alphaville that the expansion of tether supply is entirely linked to authentic buying interest. In some cases, however, tethers are also originated into reserves in anticipation of demand as well.