Tether Reduces Secured Loans To Zero In 2023 To Combat FUD
The move responds to attacks and fear-mongering from the mainstream media, especially the Wall Street Journal.
Tether, the biggest stablecoin issuer in the world, has promised to stop lending out funds from its reserves in the future, saying that it is a “mission critical to restoring faith” in the crypto market.
In a Dec. 13 post, the stablecoin issuer talked about recent “FUD” (Fear, Uncertainty, and Doubt) about its secured loans in the mainstream media, as well as other “FUD” that has been spread by the “rumour mill.”
Tether again said its secured loans are backed by “extremely liquid assets” and over-collateralized. The company also said that it would get rid of these loans by the end of 2023, saying:
“Tether is announcing starting from now, throughout 2023, it will reduce secured loans in Tether’s reserves to zero.”
The company explained that Tether’s secured loans work the same way as private bank loans to customers with collateral. On the other hand, Tether said that its loans are fully backed by more than 100%, which is different from how banks work.
The move is probably in response to a WSJ article earlier this month that said these loans were risky. The company “may not have enough liquid assets to pay redemptions in a crisis.”
It’s not the first time that Tether has been a target of the WSJ. In August, the outlet said that Tether could be considered “technically insolvent” if its assets fell by just 0.3%. At the time, the stablecoin issuer shot down the claims by saying that it had hired a top-5 accounting firm to make its attestations more trustworthy and precise.
Based on these statements, 82% of Tether’s reserves are held in ” extremely liquid assets.”
In October, Tether responded to more fear-mongering in the media by getting rid of more of its commercial paper reserves and replacing them with U.S. Treasury Bills.
In its most recent statement, the company said it would shut down its lending business without making any losses and keep putting transparency and accountability at the top of its list of priorities.
“We will continue to show Tether’s resilience through the most uncertain times, regardless of the story fabrications and disinformation concocted by Tether Truthers and clickbait headlines from mainstream media that have been consistently wrong about Tether for close to a decade.”
According to CoinGecko, Tether is the most popular stablecoin issuer right now. There are 65.8 billion USDT in circulation, which gives it a 46.6% market share.
