US Treasury Bills Worth $72.5B: Tether’s Excess Reserves Up to $3.3B

Tether Increases Treasury Reserve Holdings

Tether has continued to boost its treasury reserve holdings that back up its circulating USDT (USDT) tokens, according to its financial attestation for the second quarter of 2023. BDO, an accounting firm, attested that Tether Holdings had an $850 million increase in its excess reserves, bringing its total to $3.3 billion.

The report was also the first time that the company revealed its indirect exposure to United States Treasurys held by money market funds and U.S. Treasurys collateralizing its overnight repo. During Money2020 in Amsterdam in June, Tether’s chief technology officer Paolo Ardoino shared that the amount of US Treasury bills held by Tether was similar to the amount held by countries such as Mexico.

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Tether Allocating Profits to Excess Reserves

Tether has taken measures to bolster its reserves in the wake of the crypto market’s collapse, which has seen the bankruptcy of FTX and other crypto lending firms like Three Arrows Capital. The reserves do not include the 100% reserves that Tether keeps to redeem its circulating USDT tokens.

Ardoino, Tether’s CTO, noted that many industry players have undercollateralized assets or operations, creating weak points in the crypto ecosystem, which is why Tether has decided to allocate its profits to building up a large excess reserve.

The second quarter of 2023 saw Tether’s operational profits reach $1 billion, a 30% increase from the first quarter. This rise can be attributed to the surge in the crypto markets, which was driven by Bitcoin’s consolidation around the $30,000 mark.

Tether’s Q2 report also revealed that 85% of its reserves were held in liquid investments such as cash or cash equivalents. Its latest reserve attestation estimates its total assets to be $86.4 billion, with its outstanding liabilities in relation to circulating USDT tokens estimated at $83.17 billion.

Tether’s Share Buyback and Energy-Related Initiatives

The Q2 report of Tether discloses that the shareholders will carry out a $115 million share buyback to “strengthen” its group. The profits from the second quarter have been further directed to “other investments in energy-related initiatives.”

The company has clarified that these energy-related initiatives are not included in its attestation report, as they do not consider the investment as a suitable reserve for circulating crypto tokens.

Cointelegraph has reached out to Tether to clarify whether this specific investment refers to its recently announced $1 billion web 3.0 investments inEl Salvador’s renewable energy project.