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Tether claims that USDT is overvalued


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Tether Holdings, the issuer of Tether, a stablecoin that tracks the price of the US dollar, now claims that every USDT in circulation is backed by “more than 81% cash and cash equivalents” without exposure to any commercial paper.

The cord is ascending

In a blog post on February 16, Tether Holdings reiterated its stablecoin safety when US regulators appear to be scrutinizing crypto projects, especially stablecoin issuers.

Every USDT in circulation, Tether Holding asserts, is hyper-correlated. Of its cash reserves, Tether Holdings has booked $39 billion in US Treasury securities. The remainder is related to money market funds, reverse repurchase agreements, cash and bank deposits, which can be easily redeemed for cash on demand.

By holding its reserves in Treasuries and other liquid collateral, Tether Holdings has been reassuring the community that it is highly liquid as it can process redemption requests of any size. In 2022 alone, USDT issuers recovered more than $22 billion.

Moreover, the source mentions that despite the 2022 crisis, they also made a net profit of more than $700 million, bringing their excess reserves to $982 million.

USDT dominates the stablecoin market

Following an order by the New York Department of Financial Services (NYDFS) to direct Paxos, the issuer of BUSD, to stop minting new tokens and focus on redemption, BUSD has been declining in market value.

As of February 16, the US dollar dropped to the 8th position on the market capitalization leaderboard with a circulating supply of $13,853,012,963. BUSD dropped from $16,104,828,484 in circulating supply in the last two weeks on February 1, losing more than $2.5 billion. Over the past 3 days, there has been a clear decline in the market capitalization of BUSD.

USDT now commands more than 50% market share. There are $69,785,731,025 in circulation across major blockchains and sidechains, including Ethereum, Tron, Polygon, and Arbitrum. Notably, average USDT trading volume increased by more than 60%, rising to $58,591,117,003 on February 16.

Even as USDT gained market share, there was no formal audit of Tether reserves. However, they are constantly issuing certification reports. The latest BDO release showed that each coin is sufficiently backed that Tether’s assets have exceeded their liabilities.

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