Detailed Tether Quarterly Reserve Report: Commercial paper assets decreased by approximately 21%, while Treasury bonds increased by 77.6% to $34.52 billion

Author: Hu Tao, Chain Catcher

The issuer of USDT, Tether, today released the comprehensive reserve report for the fourth quarter of 2021, showing that the company's total assets amount to $78.67 billion, while liabilities related to digital tokens are approximately $78.53 billion, indicating that total assets exceed total liabilities to prove that USDT has sufficient asset reserves.
Since February 2021, as part of a $18.5 million court settlement agreement reached with the New York Attorney General's office, Tether has been required to disclose its reserves quarterly. This is the third reserve report Tether has published since last year.
Since the reserve report released in September last year, Tether's reserve composition has changed significantly, with commercial paper and time deposits decreasing by about 21% to $24.16 billion, cash and bank deposits decreasing by 42% to $4.187 billion, while its allocation to money market funds increased by 200% to $3 billion, and U.S. short-term Treasury bonds also grew by 77.6% to $34.52 billion.
The report also shows that Tether's $13.93 billion in commercial paper has maturities of 0-90 days for $9.94 billion, 91-180 days for $823 million, and 181 to 365 days for $823 million.
Tether preliminarily categorizes the above assets as cash and cash equivalents and other short-term deposits and commercial paper, totaling approximately $65.8 billion (accounting for 83.7%). Additionally, secured loans (not provided to affiliated entities) amount to about $410 million, corporate bonds, funds, and precious metals approximately $3.62 billion, and other investments (including digital tokens) about $5.02 billion.

In contrast, in the USDC reserve report disclosed by Circle last July, out of $22 billion in reserves, besides cash and U.S. Treasury bonds (72.8%), there were also dollar-denominated certificates of deposit (13%), commercial paper (9%), corporate bonds (5%), municipal bonds, and U.S. agency bonds (0.2%).
However, in August, Circle announced that considering community sentiment, its commitment to trust and transparency, and the changing regulatory environment, it would hold USDC reserves entirely in cash and short-term U.S. Treasury bonds, with measures in Hong Kong being implemented and reflected in Grant Thornton's future attestations. Currently, Circle has not disclosed further information.
In comparison, Tether's reserve assets include approximately $410 million in secured loans and $5.02 billion in other investments, including digital tokens, which are asset types that Circle does not hold and are considered high-risk asset types. Tether also stated that digital assets are valued at the lower of cost or fair market value.
Commercial paper is also considered a risky asset, typically issued by large companies to finance payroll and short-term liabilities. Circle decided to no longer hold such assets due to external doubts about this type of asset. Although Tether's commercial paper assets held this quarter decreased by over 21%, they still account for 30.7% of total reserve assets.
A survey article published by Bloomberg last October pointed out that Tether's commercial paper includes billions of dollars in short-term loans provided to large Chinese companies, as well as loans worth billions of dollars to other crypto companies secured by Bitcoin, one of which is Celsius Network.
In response, Tether's lawyer Hoegner stated that the vast majority of its commercial paper has received high ratings from credit rating agencies, and its secured loans are low-risk because borrowers must provide Bitcoin worth more than their loans.
The report also indicates that Tether is a defendant in three ongoing legal cases.
Currently, the total issuance of USDT is 79.4 billion, significantly reducing its numerical advantage compared to USDC. Specifically, the current issuance of USDC is 52.7 billion, BUSD is 18.3 billion, UST is 12.2 billion, and DAI is 10.1 billion.