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Stablecoin leader Tether has released another transparency report outlining the structure of its reserves and the blockchains where its tokens are issued.
The report indicates that Tether possesses $3.3 billion in surplus reserves, signifying that its tokens are more than 100% backed.
Examining Tether’s Reserves
According to the report published on Thursday, Tether holds $86.1 billion in assets, while its liabilities total $82.8 billion. These liabilities are represented by dollar-pegged USDT tokens distributed across multiple blockchains.
The largest volume of USDT (approximately 42.5 billion) is in circulation on Tron, with a competing amount (around 38.4 billion) traded on Ethereum. The next largest blockchain, Solana, has significantly fewer tokens at roughly $800 million USDT.
Eleven additional chains make up the rest of Tether’s USDT, although three of these networks – Omni, SLP, and Kusama – are set to lose support in May due to insufficient adoption.
The company’s report reaffirms statements from last month that it maintains a 4% reserve surplus, countering earlier criticisms suggesting that its assets and liabilities were perilously close to insolvency. These assertions were based on an assurance report from BDO Italia, which evaluated Tether’s balance sheet as of June 30, 2023.
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The surplus reserves serve solely as a safety measure and are generated from Tether’s earnings derived from its reserve holdings. Similar to other leading stablecoins, Tether retains the vast majority of its profits in U.S. Treasury bills, overnight reverse repurchase agreements, cash, and other cash equivalents.
The Federal Reserve’s aggressive monetary policy has increased the yield on government debt to over 5% annually, enabling Tether to earn $1 billion in Q2 2023 alone.
Stablecoin Adoption Remains Robust
A stablecoin report released by Brevan Howard this week confirmed that Tether continues to lead the stablecoin market, representing 75% of stablecoin transactions.
Reflecting Tether’s findings, the hedge fund’s analysis revealed that a majority of stablecoin transactions occur on Tron, while 50% of stablecoin volume is processed on Ethereum. “The vast majority of non-speculative activity utilizes fiat-backed stablecoins,” it noted.
Overall, stablecoins settled significantly more value last year ($11 trillion) compared to PayPal ($1.4 trillion), nearly equaling Visa at $11.6 trillion. Generally, stablecoin volume now seems to have decoupled from exchange volume, which indicates more speculative stablecoin activity.
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