Tether to outsource reserve management to U.S. securities giant Cantor: report

Consign part of USDT reserves?

Tether, which issues the crypto asset (virtual currency) US dollar stablecoin “USDT”, has revealed that it has deposited part of its reserves with the US securities giant Cantor Fitzgerald. The Wall Street Journal reported on Oct.

Cantor Fitzgerald & Co. (Canter) is one of Wall Street’s most famous bond trading firms. It is one of 25 major dealers of U.S. Treasuries and also deals directly with the Federal Reserve. Founded in 1945, it has over 10,000 employees.

Cantor manages about $39 billion in fixed income portfolios for Tether, the sources said. Tether will begin transferring reserves to Canter in late 2021, around the time a settlement with regulators is finalized, the people said.

Tether reported on Tuesday that it had assets of about ¥8.8 trillion ($67 billion) at the end of 2022, of which about ¥5.2 trillion ($39.2 billion) was held in U.S. Treasury bills. In order to increase the reliability of reserves, it is increasing the proportion of US Treasuries, which are considered to be highly safe.

Other assets include money market funds, a type of mutual fund, cash, corporate bonds, precious metals and secured loans. In addition, he explained that he would reduce the number of secured loans to zero in the future.

connection: Tether Updates Reserve Assets, Cuts Secured Loans

Authorities and history of reconciliation

Tether settled with the US Commodity Futures Trading Commission (CFTC) in October 2021.

At this time, the CFTC explained that Tether “has USDT as a backing asset in fiat currency”, but that “at least from June 1, 2016 to February 25, 2019, USDT in circulation will be We don’t have enough fiat currency to back it up,” he said, adding that he had made false statements.

It also took issue with leaving reserve holdings to unregulated companies and third parties. Tether has not admitted any violations, but has settled with the CFTC after paying a fine of approximately 5.4 billion yen ($41 million).

At this point, Tether reiterates that it has always held sufficient reserves, even though it is not all cash, and that it has never failed to comply with redemption requests.

In February 2021, Tether also settled with the New York Attorney General’s Office over similar allegations.

Since those settlements, as an improvement, Tether appears to have deposited some of its reserves with regulated Canter. Regarding reserve assets, in response to various points, the ratio of highly safe assets has been increased, and the breakdown of reserves has been reported regularly.

connection: Tether and Bitfinex reach settlement with US CFTC Regarding USDT backing assets and exchange operations

Authorities Watch Links Between Banks And Crypto Industry

The Wall Street Journal is critical of Cantor providing services to Tether. As a background, he cited the fact that the US Federal Reserve Board (FRB) and others pointed out the risks that virtual currencies pose to banks in January.

In addition to the Fed, the U.S. Office of the Comptroller of the Currency (OCC) and the U.S. Federal Deposit Insurance Corporation (FDIC) listed several risks posed by cryptocurrencies in January following the FTX bankruptcy. “We will closely monitor banks’ cryptocurrency-related exposures,” it said.

connectionUS Fed and others warn of risks cryptocurrencies pose to banks