Tether (USDT), a stablecoin that is pegged to the United States Dollar, has now launched its attestation report for the 2nd quarter of 2023, showing a healthy increase in excess reserves and operating revenue. Nevertheless, the crypto-focused partisanship in the halls of the Capitol is now spilling into the stablecoin arena, significantly ramping up the unpredictability around this nascent market’s prospects.
Tether Reveals That its Excess Reserves Increased by 35 Percent, and Operating Profit Jumped by 30 Percent in Q2 2023
As a refresher, Tether tokens, established by the crypto exchange BitFinex and which trade under the symbol USDT, were initially backed by an equivalent number of United States dollars. This implied that each USDT would always equal 1 USD. However, back in February 2019, Tether changed this policy to one where the Tether coins are now “100%” backed by “reserves,” which include currency, money equivalents (such as United States Treasuries), as well as other possessions and receivables from loans made by the business to 3rd parties. In 2022, Tether totally removed industrial paper holdings (including Chinese ones) from its reserves.
In the second quarter of 2023, Tether’s excess reserves increased by $850 million to reach $3.3 billion. Bear in mind that excess reserves are a portion of Tether’s profits that have not been distributed to its investors.
Additionally, in Q2 2023, Tether made over $1 billion in operating revenue, tape-recording a consecutive boost of around 30 percent. The company also revealed a $115 million share buyback program.
Tether presently holds 85 percent of its investments in money and money equivalents, with overall holdings of the United States Treasuries now totaling up to $72.5 billion.
Regardless of a variety of regulatory missteps for many years, Tether has continued to operate seamlessly during the existing crypto bear market– a duration that has actually been identified by unprecedented volatility. This recommends the absence of any systemic lacunae. Nevertheless, as we had noted in a previous post, Tether just recently identified 84 posts that the Wall Street Journal has composed considering that the start of 2022, with a frustrating bulk of those painting the firm behind the USDT stablecoin in a negative light.
The Regulatory Noose Tightens Around Stablecoins
The United States House Financial Services Committee recently moved seven pieces of legislation to the House flooring, including 2 key crypto-related expenses: Clarity for Payment Stablecoins Act of 2023 and Keep Your Coins Act of 2023. This move, nevertheless, was marred by partisan wrangling, with the leading Democrat, Maxine Waters, taking an especially dim view of these crypto-focused legislations. The Clarity for Payment Stablecoins Act provides clear-cut guidelines and oversight for stablecoins such as Tether’s USDT, consisting of the requirement of preserving reserves on a 1:1 basis, proper disclosure of procedures to guarantee timely redemptions, month-to-month disclosure of reserve structure, and avoidance of rehypothecation of reserves except in specific circumstances. However, offered the reality that the legislation intends to exempt stablecoins from the federal securities laws, the North American Securities Administrators Association(NASAA )has actually been less-than-enthusiastic about this expense. Steady coins will need KYC to own and reserves need to be examined. prepare yourself for USDT to have a panic attack on this news https://t.co/MAIxE13t8o– Darkhorse(@DarkhorseDNME4)July 28, 2023 Perhaps, in retaliation to this move by the Republicans in the US House Financial Services Committee, the Democrats
sneaked in a crucial stablecoin-focused change in the recently passed 2024 National Defense Authorization Act (NDAA). As can be seen in the above Xeet/tweet, the amendment
needs the Secretary of Treasury to offer standards
associated with making sure that providers of stablecoins adhere to monetary sanctions imposed by the US. The Secretary is likewise required to figure out the liabilities(or ramifications)for the company of a stablecoin vis-à-vis the transactions that happen after the coins are issued to the customer/client. This essentially imposes rigid requirements on the issuers of stablecoins to ensure compliance with Know Your Customer (KYC)and Anti-Money Laundering(AML)legislations in the United States, which entail rather a lot of additional paperwork and processing expenses for Tether and other stablecoin providers.