Tether disclosed $20.1 billion commercial-paper reserve after stablecoin shock

Tether made its first-quarter reserve attestation public on May 19, 2022, disclosing that the assets behind its issued tokens included $20.10 billion of commercial paper and certificates of deposit and $39.20 billion of U.S. Treasury bills. The release mattered because confidence in stablecoins had just been shaken by TerraUSD’s collapse and because USDT served as a major dollar-linked settlement asset across cryptocurrency markets.

The central limitation was the measurement date. MHA Cayman’s assurance opinion covered Tether Holdings Limited’s Consolidated Reserves Report only at 11:59 p.m. UTC on March 31, 2022. It did not test the portfolio during the May market shock. The accountant signed the opinion and Tether’s board authorized the report on May 18; contemporaneous Reuters and CoinDesk reports, plus Tether’s later corporate chronology, place the public release on May 19.

What the attestation established

MHA Cayman reported at least $82,424,821,101 of consolidated assets and $82,262,430,079 of consolidated liabilities. Of those liabilities, $82,188,190,813 related to digital tokens issued. Subtracting the two reported totals leaves a $162,391,022 asset surplus, a Coinburn calculation based on the point-in-time figures. That arithmetic does not measure the liquidity or credit quality of each reserve asset.

The report’s largest subtotal was $70,585,924,341 in cash, cash equivalents, other short-term deposits and commercial paper. Within it, U.S. Treasury bills were $39,199,221,428; commercial paper and certificates of deposit were $20,096,579,998; money-market funds were $6,798,150,552; and cash and bank deposits were $4,100,485,805. Smaller items included $286,155,289 of non-U.S. Treasury bills and $105,331,269 of reverse-repurchase agreements.

Outside that subtotal, Tether reported $3,149,732,368 of secured loans, none to affiliated entities; $3,729,529,946 of corporate bonds, funds and precious metals; and $4,959,634,446 of other investments, including digital tokens.

Tether described commercial paper as down approximately 17% from $24.2 billion at December 31, 2021, while Treasury bills rose from $34.5 billion. The March report gave the commercial-paper category an average 44-day duration and average A-1 rating. It did not identify issuers, countries or individual securities, limiting outside assessment of concentration and credit exposure.

Assurance was not a full audit

The accountant said the management-prepared reserve report was fairly presented, in all material respects, under the stated criteria. That was meaningful third-party assurance, but narrower than audited financial statements. Tether’s own appendix called the information unaudited and said it lacked the presentation and disclosures required for full IFRS compliance.

MHA Cayman also said it tested no activity before or after the March 31 instant, expressed no opinion on internal-control effectiveness, and provided no assurance on management’s going-concern assessment. Valuations assumed normal trading conditions rather than a large forced sale or failure of a key custodian or counterparty. Those qualifications were especially important on May 19 because the disclosed portfolio predated the stablecoin stress that made reserve liquidity an urgent market question.

Tether additionally claimed that commercial-paper holdings had fallen another 20% since April 1. That statement was not within the accountant’s March 31 assurance window and was scheduled to appear in the second-quarter report. It should therefore be treated as a contemporaneous company claim, not an independently verified May 19 balance.

Why the disclosure mattered

A 2021 settlement with the New York attorney general required Tether to publish reserve categories at least quarterly for two years. The May 19 disclosure provided the market with a more detailed asset mix at a moment when the design and redeemability of stablecoins were under intense scrutiny.

The record supported a bounded conclusion: at the March 31 measurement point, the accountant found reported assets exceeded reported liabilities, and Tether had shifted part of its reserve mix from commercial paper toward Treasury bills. It did not prove that every holder could redeem simultaneously under stressed conditions, reveal every counterparty, or describe Tether’s balance sheet on May 19, 2022.