Tether, the company behind the prominent stablecoin USDT, holds $72.5 billion worth of US Treasury bills (T-bill). This development was revealed initially in the company’s assurance report for Q2 2023.
However, Tether’s Chief Technology Officer, Paolo Ardoino, on September 5, emphasized this fact on social media platform X.
Tether Ranks As 22nd Largest Buyer Of US Treasury Bills, Could This Be A Risk?
According to Ardoino’s post, Tether’s $72.5 billion exposure to US Treasury Bills has enabled the stablecoin operator to emerge as the 22nd largest holder of these bonds, ahead of nations such as the United Arab Emirates, Mexico, Australia, and Spain.
In his post, the Tether CTO also applauded USDT’s “high utility” in developing markets, referring to the stablecoin as a “lifeline” for many citizens of nations with “insane” inflation rates.
While @Tether_to reached 72.5B exposure in US t-bills, being top 22 buyer globally, above United Arab Emirates, Mexico, Australia, Spain, …$USDt is the most used stablecoin in the world, with a huge focus on emerging markets. For many of these communities USDt is a lifeline… https://t.co/7hC12Nhzdq
— Paolo Ardoino (@paoloardoino) September 5, 2023
However, Ardoino’s post on Tether’s investment in US T-bills has brought about negative and positive reactions from crypto enthusiasts.
In particular, Matthew Dixon, CEO of Evai, a crypto ratings platform, has expressed concerns over this development. Dixon states that Tether news on its Treasury bills holdings is reassuring but “still worrying.”
#Tether #USDT news is reassuring on the face of it and yet concerning.What if interest rates continued to rise thus decreasing the value of these #Treasuries and at the same time we had another black swan induced sell off.May pressure the #Dollar peg, AGAIN.Remember recent… pic.twitter.com/mnxnkJYPia
— Matthew Dixon – CEO Evai (@mdtrade) September 5, 2023
The Evai Boss highlights the potential of increasing interest rates, which could reduce the value of these T-Bills and cause a “Black swan-induced sell-off.”
For context, the US Treasury bills are typically considered a safe investment. These bills represent a short-term debt obligation backed by the US Treasury Department.
Individuals or companies borrow their money from the government for a fixed time, usually one year or less, and in return, are issued Treasury bills to represent these loans.
T-bills are usually low-risk investments as the US government pays them back; however, they are purchased at a fixed interest rate. Therefore, if there is a rise in interest rates before the T-bills reach their maturity stage, their market value could take a hit, rendering companies unable to trade their T-bills for fresh cash in case of trouble.
In the case of Tether, Matthew Dixon believes that if this occurs, there could be a market panic, resulting in users selling their USDT tokens for other crypto assets. In the worst scenario, Dixon states that USDT’s dollar peg could be affected.
Tether’s Positive 2023 Continues
Interestingly, Tether has recorded many good strides in 2023. Earlier In May, the company published its assurance report for Q1 2023, showing its reserves had increased by $1.48 billion to $2.44 billion.
In July, Tether revealed in its assurance report for Q2 2023 an additional excess reserve gain of $850 million, bringing the company’s total reserve to $3.3 billion.
The USDT stablecoin has also received much traction in 2023, with its market share rising by over 25% in 2023 alone. According to data from CoinMarketcap, USDT currently stands as the largest stablecoin and third largest cryptocurrency, with a market cap of $82.85 billion.