Tether announced that it would reduce its commercial paper portfolio by $5 billion by the end of July as part of ongoing efforts to increase transparency.
Tether Holdings, the creator of USDT, the world's largest stablecoin, stated in a statement:
тАЬCurrently, Tether has 8.4B of these holdings, of which 5B will expire on July 31. This will result in a significant reduction in commercial paper assets to a low of 3.5B, which is on track with Tether's commitment to the community. The goal remains to bring the figure down to zero.тАЭ
As a result, Tether's long-term goal is to reduce commercial paper holdings to zero as a stepping stone toward a diverse portfolio. According to the report:
тАЬThis is part of a larger strategy to ensure that Tether has a diversified portfolio with limits to exposure on individual issuers or assets. It demonstrates a commitment by the company to reduce its commercial paper investments and validates the business, as part of its ongoing push towards an increased transparency for the stablecoin industry.тАЭ
Following the unexpected collapse of the algorithmic UST stablecoin in May, the stablecoin sector has faced widespread criticism.
Things began to go awry after UST on the Terra network was de-pegged from its US Dollar baseline.
As a result, some governments have erected barriers in the stablecoin arena. For example, the Japanese government established legislation categorizing stablecoins as digital money that must be linked to the yen or another legal denomination.
To protect investors, the law was enacted last month and said that stablecoins would only be issued by licensed banks, registered money transfer agents, and trust businesses.
As a result, Tether's plan to reduce its commercial paper holdings is intended to clear the air and position the company for a better relationship with regulators in the future.
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