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The most popular stablecoin, Tether (USDT), experienced a drastic crypto crash in May-June 2022 with a fall in market cap from around US$82 billion to US$66 billion. Thus, Tether has decided to reduce or dump its commercial paper holding for mitigating the speculation of the quality of support for the US dollar-peg trust. The main aim of USDT is to bring down the figure of commercial paper holding to zero for its holdings in the US Treasury bonds.
Commercial papers are known as the short-term unsecured debt continuously issued by any company. The value of commercial paper holding depends on the crypto companies focused on issuing it. The stablecoin management has denied all the claims regarding the commercial paper holding portfolio being backed by Chinese Commercial Paper or Asian Commercial Paper by 85%. Tether's CTO has described this information as a piece of fake news with a mission to spread more panic and fear among crypto investors of this USDT token.
Tether has exposed that the current commercial paper can be reduced to US$11 billion from US$20 billion at the end of Q1 2022. It will reach US$8 billion at the end of June 2022. The share of the commercial paper in the reserves of Tether had dropped drastically, whereas the reserves are fully backed. The Chinese CP and Asian CP holdings have started trading at a discount.
At the time of writing, the current price of Tether (USDT) is US$0.9992 with a market cap of US$65.99 billion and a volume of US$40.13 billion. The mission is to drive the future of money with unparalleled liquidity. It is the disruptor of the traditional financial system to empower emerging ventures and innovation through the blockchain space. It is a stablecoin with high stability built on multiple blockchains. But recently, it failed to show its stability in the highly volatile cryptocurrency market and incurred huge losses in crypto wallets.
Thus, dumping all the commercial paper holding from Chinese and Asian entities can help crypto investors to gain the US dollar-peg trust efficiently and effectively after the drastic crypto crash as well as the rumors on the Tether or USDT token. Zero commercial paper holding can claim its 100% transparency feature true and can attract aspiring crypto investors towards the stablecoin and its potential stability in the highly unstable crypto market.
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