Tether’s excess reserves up to $3.3B, holds $72.5B worth of US Treasury bills

Tether continues to increase its treasury reserve holdings backing circulating USDT (USDT) tokens, according to its latest financial attestation for the second quarter of 2023.

Tether Holdings published its Q2 attestation from accounting firm BDO, highlighting an $850 million increase in its excess reserves, which takes its total to $3.3 billion.

— Tether (@Tether_to) July 31, 2023

The report also serves as the first time the company has disclosed its indirect exposure to United States Treasurys held by money market funds as well as U.S. Treasurys collateralizing its overnight repo:

“By aggregating them together, the amount of Treasuries backing Tether’s stablecoins is about $72.5B.”

Speaking to Cointelegraph at Money2020 in Amsterdam in June, Tether chief technology officer Paolo Ardoino revealed that Tether’s US Treasury bill holdings were equivalent to the amount held by sovereign nations like Mexico.

Tether has looked to allocate company profits to build up excess reserves in the wake of the collapse of FTX and bankrupt cryptocurrency lending firms like Three Arrows Capital. The excess does not include the 100% reserves that Tether maintains to redeem circulating USDT tokens.

Related: Tether’s game plan in El Salvador: Why invest in Volcano Energy?

Ardoino said that industry players that have undercollateralized assets or operations have created weak points in the wider cryptocurrency ecosystem, which has driven its decision to allocate shareholder profits to building a large excess reserve.

“We believe that open communication and strong financials foster trust and reliability, and this is what the global community deserves especially in a year devastated by many failures across the banking and crypto industry.”

Tether tipped its operational profits at $1 billion from April to June 2023, accounting for a 30% increase from Q1 2023. The improved quarterly performance also reflects a general surge across the cryptocurrency markets that was driven by the recent consolidation of Bitcoin (BTC) around the $30,000 mark.

The 2023 Q2 report also notes that 85% of Tether’s reserves are held in “liquid” investments of cash or cash equivalents. Tether’s latest reserve attestation estimates its total assets at $86.4 billion. Tether’s outstanding liabilities in relation to circulating USDT tokens are estimated at $83.17 billion.

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

The company notes that energy-related initiatives are not included in its attestation report, as it does not consider the investment as a suitable reserve for circulating tokens. 

Cointelegraph has reached out to Tether to clarify whether this specific investment refers to its recently announced $1 billion investment in El Salvador’s renewable energy project

Magazine: ‘Elegant and ass-backward’: Jameson Lopp’s first impression of Bitcoin