What are Tether tokens and how do they work?
Tether tokens are assets that move across the blockchain just as easily as other digital currencies but that are pegged to real-world currencies on a 1-to-1 basis.
Tether tokens are referred to as stablecoins because they offer price stability as they are pegged to a fiat currency. This offers traders, merchants and funds a low volatility solution when exiting positions in the market.
All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves.
As a fully transparent company, we publish a record of the current reserve assets.
How are Tether tokens Issued
More stability, more growth
Tether tokens have grown in popularity over the past few years, with a market cap of over US$77 billion (as of December 2021). Tether tokens allow customers the ability to transact across different blockchains, without the inherent volatility and complexity typically associated with digital tokens.
Blockchain ready
Tether tokens exist as digital tokens built on various blockchains including Algorand, Ethereum, EOS, Liquid Network, Omni, Tron, Bitcoin Cash’s Standard Ledger Protocol, and Solana. Therefore, issuance of Tether tokens is viable on various blockchains with varying capabilities depending on the transport protocol used.
New Tokens
Tether only issues new Tether tokens when they are requested and purchased by customers who have followed our strict KYC procedure.
The token that is disrupting the global financial industry
Tether for Individuals
Tether for Merchants
Tether for Exchanges
The token that is disrupting the global financial industry
Tether for Individuals
Tether for Merchants
Tether for Exchanges
Latest news
Understanding Tether's Peg and Reserves
During periods of market volatility, users (and critics) discuss the mechanisms behind how Tether maintains the stability of USD₮ and the nature of its reserves more frequently. Tether was recently tested by market volatility and over $10 billion dollars in redemptions. The results proved that Tether is the most resilient company in crypto and in traditional finance. A question for Tether's critics: Which bank is able to process withdrawals for 10% of their total assets within 48hrs? A feat Tether was able to do effortlessly, and which was nowhere near its capacity.This article will explore the nature of Tethers peg and updates to its reserves.How Tether Maintains StabilityIn the aftermath of Terra/Luna’s dramatic collapse, stablecoins have fallen under a new wave of scrutiny from investors, and critics. The basic premise of a stablecoin is that each coin is redeemable for a fixed value which is almost always tied to a fiat currency. USD₮ has always been redeemable 1-for-1 for dollars- 1 USD₮ = 1$.Given the fact that Terra lost its peg, it’s natural that investors might have questions about what stops USD₮ from facing a similar fate. First, it’s crucial to understand Terra and USD₮ utilize completely different designs, mechanisms, and collateral. Terra was an algorithmic stablecoin that at the end of the day was not fully collateralized. It has a number of mechanisms designed to achieve stability, but ultimately those failed.USD₮ is, quite simply, fully backed by collateral. It has maintained its peg because every USD₮ is redeemable for dollars via Tether, and as such any time the price goes below $1 investors can earn a profit by buying USD₮ for a discount and redeeming it with Tether.Tether recently redeemed over $10 billion in redemption requests using the collateral which fully backs USD₮. Exchange Pricing vs Redemption FacilitiesMost commentators and investors use the current trading price for USD₮ that is quoted on exchanges like Binance, FTX, Kraken, and others. On these exchanges, users can see what the current market price of USD₮ is. During periods of intense market volatility USD₮’s price on these exchanges may go below or above $1.This does not mean USD₮ has broken its peg.It only signifies that there is more demand for liquidity than exists on that exchange's order books. Tether has over $70 billion dollars of collateral which it can redeem USD₮ against. No exchange’s order book has anything remotely resembling that amount of liquidity. As such, a few billion dollars of demand to exchange USD₮ for dollars can easily exceed the availability of liquidity on an exchange (causing a change in the price of USD₮ on that exchange)- but will not exceed Tether’s redemption facilities or change the price Tether redeems USD₮ for.Ultimately, USD₮ maintains its peg because of Tether’s redemption facility for USD₮ and the collateral behind it, not because the price of USD₮ generally trades at 1$ on exchanges. In fact, USD₮ generally trades at $1 on exchanges because investors know Tether’s redemption facility is reliable. Tether has never turned down a redemption requisition for USD₮.Some critics have tried to suggest that Tether processing $10 billion dollars in redemptions is a sign of weakness, but what it actually shows is that Tether is able to redeem a request for over 10% of outstanding USD₮ tokens within days. Almost no bank in the world would be able to process a withdrawal request for 10% of their assets within the same time frame, much less a few days.Tether’s ability to redeem $10 billion is a real-time demonstration of its strength, and the confidence the larger crypto ecosystem has in USD₮.Tether’s ReservesOutside of discussion around the peg, it’s common that during periods of volatility people discuss (and critique Tether’s reserves). Tether has released multiple assurance opinions which show the makeup of Tether’s reserves. The vast majority of USD₮ reserves are cash and common cash equivalents. In Tether’s latest assurance opinion, Tether announced that over 55% of total USD₮ reserves are now US Treasuries and that commercial paper now makes up less than 29% of USD₮’s backing. While both commercial paper and treasury reserves are commonly held cash equivalents, US treasuries now make up a much larger percentage of Tether’s reserves. However, Tether is committed to further reducing commercial paper as part of its reserves and increasing its holding of US Treasuries. This will be reflected in future assurance opinions in the coming months.These announcements are part of Tether’s ongoing commitment to transparency and stability. Tether’s reserves are strong, conservative, and liquid. This is further demonstrated by Tether’s ability to honor $10 billion in redemption requests within days.USD₮ has been the market leader in the rapidly growing stablecoin sector since its very inception. Tether has navigated multiple black swan events (including the Coronavirus crisis) and many cryptocurrency market drawdowns over 50%. During these events, USD₮ has always maintained its peg and Tether has always processed every redemption request for its verified customers.While markets may continue to be volatile, USD₮ will not be.
Assurance Opinion Once Again Re-affirms Tether’s Reserves Fully Backed; Reveals Significant Reductions in Commercial Paper and Increase in U.S. Treasury Bills
Today, Tether Holdings Limited made available its latest quarterly assurance opinion demonstrating the strength of its reserves revealing significant reductions in commercial paper investments and an overall increase in U.S. treasury bills. It also demonstrates that the group’s consolidated assets exceed its consolidated liabilities.It shows a further approximately 17% decrease in its commercial paper holdings over the prior quarter from $24.2B to $20.1B; an action Tether has continued with a further 20% reduction since April 1 2022 and which will be reflected in the Q2 2022 report. The attestation, completed by independent accountants MHA Cayman, re-affirms the accuracy of Tether’s Consolidated Reserves report, which breaks down the assets held by the group as of March 31, 2022:
- Consolidated total assets amount to at least US$82,424,821,101.
- The consolidated group’s consolidated assets exceed its consolidated liabilities.
- The consolidated group’s reserves held for the digital tokens issued exceeds the amount required to redeem the digital tokens issued.
- Consolidated assets show a significant average maturity reduction with focus on more short-term assets.
- Tether's Latest Assurance Opinion Reveals That Reserves Held Exceeds Liabilities
- https://tether.to/latest-assurance-opinion-confirms-tether-fully-backed/
- https://tether.to/assurance-opinion-apr-21/
- https://tether.to/assurance-opinion-mar-21/
Tether token
Tether supports and empowers growing ventures and innovation as a digital token built on multiple blockchains.