Traders withdraw $10 billion from Tether as talks of regulatory scrutiny grow

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Traders withdraw $10 billion from Tether as talks of regulatory scrutiny grow

The talks of regulatory scrutiny for stable coins continue to grow, and traders withdrew around $10 billion from TetherUSDT in the last two weeks.

The circulating supply ofUSDT dropped to $73.3bn on Monday from $84.2bn on May 11.

On May 20 alone, on-chain data shows that traders withdrew $1 billion from Tether. The massive withdrawal was caused by the collapse of the Terrablockchain UST and LUNA.

Following UST's crash, USDT temporarily lost its peg, along several stablecoins. This brought attention to the class of criptocurrencies and how stable they were.

In a recent blog post, Tether wrote that the de-pegging across crypto exchanges does not mean that USDT has broken its peg, instead, the de-peg shows that.

Tether had earlier claimed that USDT has a one-to-one dollar backing in a bank account, but later changed its tune to say it uses other assets such as commercial paper and even digital token as collateral. When it settled with authorities in New York, it revealed this.

The firm must publish its reserves every quarter as part of the settlement. The latest attestation report shows it has reduced its commercial paper holdings while increasing US treasury bills. The company is now holding foreign government debt.

The report shows that its reserve exceeds the amount required to redeem the digital token issued, which is about 11% of its investment in corporate bonds, funds, and precious metals.

Patrick McKenzie, a fintech commentator, said that Tether's account shows it has $162 million more in its reserves than its token. Some of its investments, including that in the Celsius network, are not performing well due to the bearish nature of the market.

Paolo Ardoino, Tether's chief technology officer, said in a statement, Tether's chief technology officer.