World’s largest stablecoin issuer, Tether has switched the accounting firm that audits the massive reserves that back its USDT token to BDO Italia, the 5th largest accounting firm in the world.
Tether officially began working with BDO Italia in July 2022 for its quarterly attestations. With this alignment, the issuer will be moving towards the release of its attestations from a quarterly basis to monthly reports.
Onboarding a major accounting firm, which can be held accountable by third parties for financial information, to engage in an audit of a crypto token was also a notable success for Tether’s initiative. The developing nature of the cryptocurrency industry, combined with the lack of regulatory oversight, makes the potential risk associated with a comprehensive audit of USDT or any other crypto asset too high for accountancy firms.
Tether seeks to reassure investors that its cryptocurrency is backed by U.S. dollars after the major stablecoin has been dogged by speculation that it holds insufficient capital to support its market cap of USDT.
Paolo Ardoino, CTO of Tether, comments: “We are committed to serving the fast-growing cryptocurrency market as the strongest stable asset in the Web3 economy. The utility of Tether has grown beyond being just a tool for quickly moving in and out of trading positions, and therefore it is mission-critical for us to scale alongside the peer-to-peer and payments markets. Tether’s commitment to transparency is not something new. It aligns with its leadership’s responsibility as a market leader to educate the world about stablecoin technology.”
Tether zeros exposure to Chinese commercial paper
While the landscape for stablecoins is still in its infancy, its potential has led the world’s leading accounting firms to explore ways to implement the emerging technology in their work. Also, other professional services providers have been eyeing this trend for quite some time as Bitcoin, and other established cryptocurrencies have now been more broadly accepted as forms of settlement.
The development also comes at a time of major declines in the broader cryptocurrency market, which has led crypto firms to fail and erase billions of dollars of digital assets.
Demand for stablecoins in the e-commerce and payment space has been surging as the fiat-backed tokens allow users and merchants to avoid volatility. Moreover, online retailers and payment gateways benefited from faster, cheaper transactions as compared to credit cards and traditional payment systems.
This trend was driven by growing interest in decentralised finance (DeFi) and OTC desks that use the token to settle block trades over-the-counter.
As the company continues to face questions about what its USDT token is actually backed by, Tether has been reducing the amount of corporate debts in its reserves.
Per its own statics, Tether’s portfolio holds no Chinese commercial papers and as of July, its total commercial paper exposure has been reduced yet again to a mere ~$3.7 billion (from $30 billion in July 2021). The company also plans to further decrease to ~$200 million by the end of August 2022 and to zero by end of October/early November 2022.
In absolute terms, the value of these instruments dropped by more than $24 billion. Additionally, Tether reduced its cash assets, from $7.2 billion to $4.2 billion.