Tether released their reserves breakdown, as required by the New York Attorney General. There's a lot of noise about it (OMG it is only 2.9% backed by cash!!) but this doesn't look that bad to me?pic.twitter.com/lRxPpGGMYI
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It's basically a money market fund. Lots of short duration debt, commercial paper, repo, treasuries. Look, here is the composition of a similarly sized $24bn money market fund -pic.twitter.com/FZLHM28xTS
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So yes, it is not 100% backed by cash, and it holds some things which are a bit surprising (precious metals? digital tokens?) but it looks reasonable to assume that the price risk they are taking on those will be covered by interest on the debt instruments.
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Big caveat of course - this is not audited, and you would probably want more information on e.g. who exactly are the companies backing the commercial paper? What assets are backing the secured loans?
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But if you feel okay assuming there is nothing untoward there ... we are happy to treat money market funds as cash so we should be more or less happy to treat USDT as cash too.
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The most incredible thing is that they have issued $58bn of non-interest-bearing crypto tokens and are investing the proceeds into short-duration interest-bearing financial instruments probably earning more than $500m/year, absolute king move.
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End of conversation
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Yeah, the precious metals part is the only real weirdness.
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