To quell rumors about the quality of its reserves, Tether Limited has revealed that it will undergo a full audit. According to Paolo Ardoino, the company’s chief technology officer, a major accounting firm will audit the company.
Ardoino confirmed the information to the Euromoney website, but did not provide the name of the company. The executive only said that it will be one of the 12 largest accounting firms in the world.
At first, Tether wanted to work with the so-called Big Four (EY, PwC, Deloitte and KPMG), the largest auditing companies in the world. However, the CEO said that they are all afraid to enter the cryptocurrency market until there is regulation.
“It’s one of the top 12, so it’s not too bad. The big four are a little more cautious about providing a full audit when the rules are unclear,” Ardoino said.
Conducting an audit has been one of the biggest demands of Tether users in recent years. In fact, even US regulators have required the company to disclose the assets backing its stablecoins.
Months ago, rumors pointed out that USDT was backed by high-risk assets, such as high-risk debt. According to rumors, these papers would represent a large part of USDT’s backing.
If that were true, USDT’s backing was at high risk of collapsing. However, Tether has firmly denied these rumors. The company said Chinese debt is not a relevant part of its reserves.
Commercial paper is a form of unsecured short-term debt issued by corporations and financial institutions to meet liabilities and is generally sold at a discount.
Currently, Tether makes quarterly audit reports available on its website, including the composition of its reserves. But the community still doesn’t feel safe and considers the process too simple. Therefore, Tether is looking for new ways to guarantee security to the market.
Tether honors looting on drop
USDT is the largest stablecoin by market cap and aims to remain pegged to the US dollar. That is, the USDT price must always remain at or close to US$ 1.00.
However, the stablecoin price had several moments of greater parity losses. For example, during the Earth stablecoin crisis (UST) on May 12, the price of USDT dropped to $0.97. Market momentum has impacted several stablecoins.
Even now, at the time of writing, USDT is worth around $0.998. That is, just below par.
Given this, investors have redeemed billions in USDT in recent weeks. As per data from CoinMarketCap, USDT has lost $6 million in market cap, dropping from $73 billion to $67 billion in recent weeks.
But Ardoino notes, however, that Tether has never denied $1 ransom requests.
“We showed that in the worst case scenario – when the UST was falling apart, the entire crypto market was falling apart and the stock market was falling – we received a ton of withdrawal requests and honored them within minutes,” he said.
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