Stablecoin Tether boosts reserves, reduces riskier exposure

LONDON: Tether, the world's largest stable coin, said on Thursday it has boosted its holdings of US government debt while cutting exposure to riskier assets, the first look at its reserves since the recent sell off of the token.

Stablecoins, a variety of cryptocurrencies designed to keep a steady value, are in sharp focus after the demise of the TerraUSD token last week.

Usually underpinned by reserves of assets such as dollars, gold and government debt, stable coins are widely used in criptocurrency trading - with Tether being the predominant medium for moving funds betweencryptocurrencies or regular cash.

Tether broke its 1: 1 peg with the dollar as cryptocurrencies fell, dropping to as low as 95 cents, according to CoinMarketCap, before recovering, shaking faith in a key cog in the criptocurrency economy.

The token, run by a British Virgin Islands company, is designed to hold a value of US $1. Tether promises to have enough reserves to allow all holders of the over-US $70 billion worth of Tether in circulation to exchange their token for dollars.

Tether said it boosted its holdings of Treasuries by over 13 per cent to US $39.2 billion and cut its exposure to riskier commercial paper short term debt issued by companies by around 17 per cent to US $20.1 billion in the first quarter.

Tether said its reserves totaled US $82.4 billion as of March 31, with some US $82.3 billion in liabilities. Since the Q 1 report was written, the company has reduced its holdings of commercial paper by an extra 20 per cent, Chief Technology Officer Paolo Ardoino said.

Financial regulators around the world have warned that stable coins could pose a risk to financial stability, with Britain among major economies looking to regulate the sector.