Tether Plans to Eliminate All Secured Loans by 2023

Tether (USDT), the issuer of the popular stablecoin, has announced its intention to completely eliminate all secured loans by 2023.

Tether Plans to Eliminate All Secured Loans by 2023

In an interview with The Wall Street Journal on December 13, Tether revealed that its secured loans currently amount to $6.1 billion, representing 9% of the company's total assets as of September 30. Tether's total assets exceed $68 billion.

In response to recent scrutiny and challenges, Tether reiterated that its secured loans are over-collateralized and backed by highly liquid assets.

However, following a series of bankruptcies in 2022, Tether plans to reduce its loans to zero by 2023 as a risk management strategy. The growing list of Tether’s loans could potentially impact its ability to redeem USDT in the event of a crisis.

The company stated:

“Tether is managed with professionalism and prudence. This will be further demonstrated by successfully winding down its lending operations without incurring losses, as all loans are over-collateralized with liquid, high-quality assets.”

This decision is driven by Tether’s unwavering commitment to serving the global crypto community, which has continued to support the company through the industry's evolving challenges.

Additionally, this move is seen as a measure to reinforce investor confidence in the wake of the FTX collapse and amidst efforts by other exchanges and crypto companies to assure their solvency.

According to Tether's latest report on November 10, the company’s reserves are highly liquid, with more than half of Tether’s collateral held in U.S. Treasury bills and a substantial portion maintained in cash.

Furthermore, Tether achieved its goal of eliminating commercial paper as collateral for USDT by October 14, underscoring its commitment to backing USDT with the safest, most liquid reserves in the market.