Tether’s stablecoin is backed by company ‘reserves’ and not the US dollar

Tether, which was previously stated to be backed by the US dollar, has changed its collateral breakdown revealing that it is no longer 100% backed by USD

Tether has silently updated its collateral breakdown – which formerly suggested its stablecoin was backed by the US dollar – to state USDT is actually backed by the company’s personal “reserves” and not USD.

A stablecoin is typically backed by fiat currency. Previously, Tether had stated that all of its stablecoins were pegged to the US dollar, but an update has now appeared on the company’s website revealing that this is not 100% the case.

The website now reads: “Every USDT is always 100% backed by our reserves, which include traditional currency and cash equivalents and from time to time, may include other assets and receivable loans made by Tether to third parties.”

People have previously questioned whether Tether had the cash reserves to back each USDT in circulation.

Documents then surfaced showing how the company had over $2 billion in reserves, though the documents did not answer every question the public had.

Tether updating its collateral breakdown has not gone unnoticed by the public, with news of the silent update quickly spreading on social media. One Reddit user stated: “Tether once again posts a sneaky update.”

It didn’t take long for other Reddit users to swarm to the post and comment their thoughts. One user demonstrated their scepticism:

“Was it ever ‘officially’ backed 100% by USD though? Just because they said it was, never really meant that it was. And a sketchy one-time ‘audit’ in place of a quarterly audit doesn’t cut in proving their reserves.”

Another user commented: “It’s one thing to start with that situation, but it’s another to switch to it after selling billions of tokens under a guarantee.”

Interested in reading more Tether-related news? Discover more about the stablecoin with our introduction to the project.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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