Since UST Stable Coin Collapse, USDT Market Cap Dropped By 10 Billion USD. Tether’s redemption program allows users to trade USDT for fiat currency, lowering the total market value of the collateralized stable coin.
As per the data from Coinmarketcap.com, the USDT market cap was 82.24 Billion as of 6 May 2022. As of Now (24-May-2022) the market cap of USDT is 73.2 Billion USD, A nearly 10 Billion USD market cap loss. After the Terra USD de-pegging started it caused a massive selloff in the entire crypto market. many stable coin investors lost millions due to the Terra LUNA ecosystem collapse.
Tether said in its latest attestation that commercial paper in its reserves decreased by 17% to $20.1 billion in Q1 2022 from the previous quarter.
The unique feature of USDT is how Tether ensures that its value remains fixed to the US dollar. Tether claims that whenever it issues new USDT tokens, it distributes a similar amount of USD to its stores, ensuring that USDT is fully supported by endless cash counterparts.
Tether had previously stated that USDT has a one-to-one dollar bank account backing but later clarified that it uses other assets as collateral, including commercial paper and even digital tokens. It revealed this when it reached a settlement with New York authorities. As part of the settlement, the company must publish its reserves every quarter.
According to the most recent attestation report, it has decreased its commercial paper holdings while increasing its holdings of US Treasury bills. The firm also revealed that it now owns foreign government debt.
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Tether (USDT) Releases Report Claiming Fully Backed Reserves After TerraUSD Collapse
The MHA Cayman accounting firm, according to the report, conducted an independent audit of Tether’s holdings as of March 31st of this year. Commercial paper holdings fell 16.9% from $24.2 billion to $20.1 billion in the third quarter, compared to the previous quarter.
Tether, on the other hand, claims to have increased its money market fund and treasury bill allocation by 13.6 percent, from $34.5 billion to $39.2 billion.
Ardoino says that while addressing recent challenges in the crypto space, such as the crisis sparked by Luna Foundation Guard’s TerraUSD (UST) de-pegging from the US dollar,
Tether has maintained its stability through multiple black swan events and highly volatile market conditions and, even in its darkest days, Tether has never once failed to honor a redemption request from any of its verified customers,” said Tether chief technical officer Paolo Ardoino. “This latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative, and liquid.“
Tether’s circulation continues to decline, allowing Circle’s USD Coin to profit from Tether’s decline in circulation. Tether’s USDT fell to 95 cents on May 12 after briefly losing its dollar peg. This is far below the $1 mark that it is intended to maintain.
Tether is the world’s largest stablecoin, and it is intended to be pegged one-to-one to the US dollar. According to data from Coinmarketcap, there had been nearly $10 billion in withdrawals from Tether’s USDT since the setback. Investors sought safety in other cryptocurrencies that attempted to maintain a peg with the US dollar after the algorithmic stablecoin TerraUSD failed.