The move comes after the collapse earlier in the year of TerraUSD and increased scrutiny of stablecoins in general.
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Stablecoins are an offshoot of cryptocurrency, which are supposed to maintain a 1-to-1 redemption value to a more stable currency such as the U.S. dollar.
Tether had been under increasing pressure even before the fall of TerraUSD. While the stabelcoin issuer claimed its tokens were backed, it settled charges last year from the New York Attorney General’s office that it did hold proper reserves of U.S. dollars to back all its coins.
Fallout from TerraUSD
However, since the TerraUSD collapse several countries—including the U.S.—have proposed legislation to require Tether and other issuers to file detailed reports on their reserves as a way to be more transparent with customers.
“Tether is committed to not only lead in innovative technology, but also in transparency and accountability to its customers who use stablecoins to make tens of billions of dollars in trades every day,” a statement from Tether read.
It is worth noting Tether’s stablecoin is significantly different from the TerraUSD coin. While Tether is backed by fiat currencies, cash equivalents and other assets, UST was an algorithmic stablecoin. Such stablecoins use financial engineering to maintain their 1-to-1 peg to a cryptocurrency called Luna.
Tether had been issuing quarterly updates on its reserves which are available on its website. The company had been using a Cayman Islands firm, MHA Cayman. The last report at the end of March said Tether held reserves totaling more than $82.4 billion—in which $39 billion was in U.S. Treasuries.
In addition to announcing the hiring of BDO Italia, Tether also said it will look to issue reserve reports monthly instead of quarterly.
“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,” said Tether CTO Paolo Ardoino in the statement.
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Illustration: Dom Guzman
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