Tether Wants to Be More Transparent. But Crypto Issuer Is Still Falling Short.

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Tether, the largest issuer of cryptocurrency stablecoins, has hired a major accounting firm to review its quarterly reserves report to promote transparency.

The move comes as Tether faces a competitive threat from rival circles.

According to the issuer, Tether is working with the Italian arm of BDO, the fifth-largest public accounting firm by revenue. BDO Italia said on Friday he released a guarantee report on Tether’s reserves, with the issuer moving to monthly guarantee reports. His two accounting firms in the Cayman Islands produced Tether’s assurance report.

We are committed to serving the burgeoning cryptocurrency market as the strongest and most stable asset in the Web3 economy, said Paolo Ardoino, Chief Technology Officer of Tether, in a statement.

Stablecoins form the foundation It serves as the foundation for all trading and lending activity as a stable source of value in a world of volatility, providing vital liquidity to traders, funds and market makers.

According to CoinMarketCap, more than 90% of all cryptocurrency trading volume is in stablecoins, making Tether the third largest digital token after Bitcoin and Ether. USD Coin issued by Circle, commonly known as USDC, ranked 4th.

Stablecoins such as USDT and USDC are asset-backed, with issuers claiming each token is backed 1:1 with the dollar.quality and transparency Issuer reserves are under scrutiny As Crypto Regulation Develops.

Failure of stablecoin issuers to redeem these tokens for their pegged value could seriously harm the digital asset ecosystem.

Tether is not always transparent, as required by regulators. The British Virgin Islands-based issuer settled a lawsuit last year with the State of New York and the Commodity Futures Trading Commission over reserve and disclosure practices.

Latest report approved by BDO Italy shows an improvement in the quality of Tether reserves.Possession of commercial paper that triggered size concerns Compared to other reserves, it decreased 58% on a quarterly basis to $8.4 billion at the end of June. About 45% of his $66.4 billion reserves in Tether are held in US Treasuries. Total reserves fell from his $82.4 billion last quarter, but two categories of reserves increased. Secured loans increased from $3.1 billion to $4.5 billion, and other investments increased from his $5 billion to his $5.6 billion.

BDO-capable companies that approved Tether’s report represent an important step towards greater transparency, but fall short of the full financial audit that Tether has long promised. Barons May.

BDO Italia has approved Tether’s reserves with an opinion of reasonable assurance that the report is free of material misstatement. This opinion falls short of audits that also review areas such as risk management and financial management.

Tether does not meet US Generally Accepted Accounting Principles (GAAP), including annual independent audits. It also does not comply with International Financial Reporting Standards.

As we have said publicly, auditing is a priority for us and we are thrilled to have the opportunity to advance our path forward, a Tether spokesperson said. Barons“We are committed to getting one as soon as possible and this is the first step in that process.”

Trust has become more important in the last few months As competition intensifies Stablecoin space, especially between USDT and USDC after Tether Lost a peg on the secondary market During the May trading turmoil.

Coinciding with the number of USDT tokens in circulation, the token market cap fell by $17 billion from early May to early July, from $83 billion to $66 billion. USDC’s market cap increased by more than $10 billion over the same period, from $46 billion to $56 billion.

However, that trend appears to have reversed, with USDT in circulation increasing to nearly $68 billion as of Monday, while USDC circulation has fallen to $53 billion from its peak in July.

The next chapter in the stablecoin battle may hinge on transparency, and Tether’s adoption of BDO Italia represents the latest salvo.

Please contact Jack Denton at jack.denton@dowjones.com.