Tether says that its decision to eliminate security loans shows the company's commitment to its customers.
Tether, the issuer of Tether (USDT) stablecoin, is planning to remove security loans from its reserves in 2023.
According to the blog post shared on December 13th, the move is “critical to restoring faith" in the crypto market and its ecosystem.
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It can be assumed that the move was made after the Wall Street Journal stated that Tether’s loans are risky and the company may not have enough assets to pay redemption in the case of a crisis.
Tether addressed the situation, calling it a “cycle of Tether FUD (fear, uncertainty and doubt) that’s hitting the rumor mill.” Moreover, the company reiterated that its security loans are “overcollateralized and covered by extremely liquid assets.”
On top of that, Tether stated that the decision to remove its security loans was made to show commitment to its customers.
This decision is fueled by our unwavering commitment to serve the global audience who have continued to support Tether every step of the way.
It is worth noting that Tether’s security loans are similar to the ones issued by private banks using secured collateral. Tether emphasized that the main difference between Tether’s loans and bank loans is that the company’s loans are backed by over 100%.
It seems that the mass media has targeted Tether for quite some time. In the blog post, Tether outlined several situations where the news portals criticized, questioned and created narratives about the company. USDT issuer ended its blog post by stating:
No matter what Tether FUD skeptics and journalists throw at us, we will continue to focus on emerging markets, financial freedom and demonstrate the deep care for our community that have made us the most trusted (and most used) stablecoin by people worldwide.
In October, Tether eliminated all of its commercial papers and replaced them with US Treasury Bills (T-Bills). In the newest blog post, Tether claims that at that time, critics stated that Tether’s “commercial paper reserves were worthless and would never sell.”
