The Evolution of Tether's Reserves

by Tether | Feb 16 2023

Tether’s success has always been contingent on USD₮ being backed by extremely liquid, conservative reserves. During a year when many crypto companies experienced massive headwinds, Tether has continued to improve its reserves in line with market conditions (rates, liquidity, etc).

Over the course of 2022, Tether has successfully reduced its commercial paper exposure to zero without any gaps in liquidity for USD₮ holders and without drawdown to Tether. USD₮ is now backed in excess of 81% by cash and cash equivalents without any exposure to commercial paper. This includes over $39 billion in direct exposure to US Treasuries with the remainder constituted by money market funds, reverse repo agreements, and cash & bank deposits.

These reserves represent conservative and highly liquid collateral that allows Tether to process redemptions quickly and in large sizes. This claim has been put to the test by Tether’s ability to smoothly process over $21 billion in redemptions in 2022 during the most significant financial crisis the crypto sector has seen.

Furthermore, despite selecting collateral based on its conservative and liquid nature, Tether’s reserves and operations have generated over $700 million in net profit which has been added to Tether’s reserves resulting in total excess reserves of $960 million.

Many of Tether’s critics over the years have claimed Tether would never be able to hold a reserve composition such as the one it currently holds. Tether will continue to prove its critics wrong.

Tether Approaches 50% of Stablecoin Market Share

In light of recent regulatory headwinds which have caused issues for BUSD and to a lesser degree USDC, USD₮ currently represents roughly half of the overall stablecoin market. Tether also settled more value than ever during 2022! The total settlement for Tether crossed $18.2 Trillion dollars which was more than either Mastercard or Visa.

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Tether’s settlement volume also surpassed competitor stablecoins by a large margin.

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Tethers Emerging Markets Focus

Unlike many of Tether's competitors, our focus is not on the United States, but on emerging markets around the world. The US is fortunate to have highly developed financial infrastructure and the world's premier currency, the Dollar. 

Emerging markets, on the other hand, often struggle with limited financial infrastructure, unstable currencies, and limited access to the Dollar. 

Tether's focus on emerging markets has been a key part of the Tether story and expands operations beyond a single main country.

Tether's focus has resulted in real adoption across the world.

In Brazil,“more than $1.4 billion was moved using $USD₮ across 79,836 operations in August. In October, almost $1.8 billion was transacted using USD₮ in 119,366 operations.” In Africa, the Bitfinex Leos community has been sharing stories from Tether users in Africa. These have featured users from Nigeria and Kenya documenting how Tether allows them to manage their businesses and financial lives despite currency instability and poor financial infrastructure.

In Lebanon, Turkey, Argentina, and Myanmar people have increasingly turned to USD₮ to navigate currency crises and impaired financial infrastructure.

Tether will continue to fight for financial freedom and support projects and organizations which advance global freedom and financial inclusion in the emerging markets.

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