Tether’s Q3 attestations prove that it can’t quit secured loans

Tether’s most recent report on its reserves shows a significant increase in what it describes as “equity.” Additionally, it claims it has made over $7 billion in profits over the last nine months and that its secured loans business has grown.

The world’s most popular stablecoin has reached a market capitalization of over $120 billion, and it holds over $80 billion in United States Treasury securities, mostly with Cantor Fitzgerald. 

History of Tether’s secured loans

Some of Tether’s clients, including Celsius and Nexo, received secured loans from it that frequently used bitcoin as collateral. However, during the industry issues in late 2022, following the bankruptcies of Celsius, FTX, Alameda Research, and many others, Tether published a blog post titled Tether Addresses FUD Around Secured Loans, Reveals Plans to Reduce These to Zero in 2023.

Read more: CHART: Tether has attracted US government action 19 times

In this post, Tether announced its intention to reduce the role of secured loans in its reserves to $0 throughout 2023. 

Instead, what it did was make enough in profits to begin describing these secured loans as “excess reserves.” This would mean the ‘excess’ funds in the reserves were greater than the size of the secured loans.

Since then, the program has continued to grow and has reached a total size of $6.7 billion. Interestingly, this now exceeds the ‘excess’ in the reserves, which totals only $6.1 billion. This means Tether is once again partially backed by these secured loans.

However, the total Tether Group “equity” of approximately $14 billion still exceeds the size of the secured loans.

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