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BUSD Micro | USDT Firepower Display: Commercial Paper Zero, Excess Reserves of 9.6 Billion, Settlement Volume of 18 Trillion, Surpassing VISA!

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BUSD Micro | USDT Firepower Display: Commercial Paper Zero, Excess Reserves of 9.6 Billion, Settlement Volume of 18 Trillion, Surpassing VISA!

The issuance of BUSD by Paxos has recently been targeted by the SEC and the New York Department of Financial Services, leading to the suspension of BUSD issuance. Seizing the opportunity, Tether, the issuer of USDT, released a statement yesterday, stating that USDT accounts for over half of the market value and no longer holds "commercial paper."

In the past, rumors about USDT not having a 100% reserve have never stopped circulating. Even those who believed Tether had a 100% reserve were concerned about the proportion of commercial paper held by Tether.

According to an announcement, Tether had already reduced its exposure to commercial paper to zero last year (2022), meaning Tether no longer holds commercial paper.

Tether stated in the announcement:

In 2022, Tether had reduced its exposure to commercial paper to zero. Currently, 81% of the stablecoin's reserve assets are in cash or cash equivalents, including $39 billion in U.S. Treasury bonds, with the remainder in money market funds, reverse repurchase agreements, cash, and bank deposits.

Tether also emphasized its redemption and profitability capabilities.

They mentioned that throughout last year, they processed $21 billion worth of USDT redemptions, including those triggered by the UST panic.

Additionally, despite a more conservative approach to asset holdings, Tether achieved a net profit of $700 million last year, which has now been allocated as "additional reserves for the stablecoin," meaning Tether not only has a 100% reserve

but also an additional $960 million in protection beyond the 100% reserve.

The additional reserves are part of their regular operations, meaning the $960 million profit is reinvested in purchasing short-term bonds, money market funds, and reverse repurchase agreements to increase profitability.

Nevertheless, Tether has achieved its goal of showcasing its firepower.

Yearly Settlement Volume Reaches 18 Trillion, Surpassing Mastercard and Challenging VISA

While showcasing its strength, Huobi didn't forget to mention the unfavorable regulatory factors surrounding BUSD.

Considering the regulatory challenges faced by BUSD and USDC, USDT now accounts for approximately half of the stablecoin market.

Furthermore, Tether stated that the yearly trading volume of USDT has surpassed that of VISA:

Tether's settlement value last year also hit a record high, with a total settlement amount of 18.2 trillion, surpassing both Mastercard and VISA cards.

Source: Tether

Although Tether has improved the liquidity of its balance sheet, it still faces similar issues to USDT and BUSD: the potential classification as a "security."

Previously reported, assets backing fully reserved stablecoins such as BUSD, USDC, and USDT hold government bonds, making them more akin to a money market fund.

Money market mutual funds (MMMFs) are securities provided by companies that invest in commercial paper, certificates of deposit, treasury securities, and repurchase agreements. In the United States, this is a tool regulated by the SEC.

Zhao Changpeng: Increase in USDT, Decrease in USDC

Zhao Changpeng stated that after a significant decrease of 24.5 billion USD in BUSD circulation, most of it has been converted to USDT. Meanwhile, USDC has seen a slight decrease, indicating a shift in the stablecoin landscape.