BENGALURU, India (Reuters) – The organization that manages tether, the world’s largest stablecoin, said on Friday it had cut holdings in commercial paper by about 58% as part of an earlier commitment to reduce exposure to riskier assets.
Usually backed by reserves of assets such as the US dollar, gold and government debt, stablecoins are widely used in cryptocurrency trading and tether is the predominant means of moving funds between cryptocurrencies or traditional money.
Tether reserves consist of US Treasury bonds and commercial paper, which refers to short-term debt issued by companies.
The token has $8.4 billion in commercial paper and plans to reduce its holdings in this type of asset to $3.5 billion by the end of July.
The company intends to reduce its holdings of commercial paper to zero in a bid to address concerns about the quality of the assets that underpin its token amid the collapse of the cryptocurrency market.
Tether dropped below the 1:1 parity with the dollar in May before rebounding, a fall that sent shockwaves through the industry.
(Por Mehnaz Yasmin)