Tether Financial Statement Shows a $2 Billion Rise in USDT Loans

According to a recent consolidated reserve report by Tether, the issuer of the largest stablecoin, USDT, the company has reached a two billion dollar increase in loan issuance from December 2021.

Tether’s official financial document reveals that the company hit $6.1 billion in secured loans as of September, representing 9% of its total assets, compared to the $4.1 billion at the end of 2021. Wall Street Journal (WSJ)’s reporter, Jonathan Weil, believes the increased lending of USDT tokens by its issuer heightens the risk that the company may not have enough liquid assets to pay redemptions in a crisis.

In Weil’s words:

The rise in Tether’s lending represents a broad risk to the crypto world. Stablecoins such as tether (USDT) are anchors in the system. They are vital for trading many cryptocurrencies.

Nonetheless, the financial statement describes the lent funds as secured loans, noting that liquid assets fully collateralize them and are constantly monitored and measured at amortized cost. Furthermore, Tether’s latest reserves report showed total assets of $68.06 billion and liabilities of $67.81 billion, leaving a thin capital cushion of about $250 million, equivalent to just 0.4% of assets.

Early last month, the price of the most significant stablecoin in the crypto industry momentarily slipped by a minuscule percentage creating a round of fear, uncertainty, and doubt. Tether’s chief technology officer (CTO), Paolo Ardoino, declared on Twitter that the firm had processed over $700 million USDT in redemptions within 24 hours.

#tether processed ~700M redemptions in last 24h.
No issues.
We keep going.

— Paolo Ardoino ? (@paoloardoino) November 10, 2022

Specifically, the CTO noted no cause for alarm as the company has enough reserve to cover USDT swaps. Currently, USDT is back at the $1 peg.

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