Tether, the largest stablecoin by market capitalization, announced that BDO Italy has taken over its asset attestation. The global BDO group is the fifth largest accounting firm, although it’s just a third of the size of number four ranked KPMG. Previously the attestations were by Moore Cayman.
In February 2021, Tether was banned from operating in New York state and in October, it received a $41 million fine from the Commodity Futures Trading Commission (CFTC) over untrue and misleading statements about the reserves that back the stablecoin.
Since the collapse of the Terra algorithmic stablecoin in May, a flight to quality has seen the market capitalization of Tether decline from $83 billion to $67 billion. That coincided with the stablecoin losing its dollar peg, declining to 95 cents around May 12 before re-establishing the peg. Since then, the second-ranked stablecoin USDC has risen from $49 billion to $54 billion.
Paxos, the issuer of the Binance USD Coin, set the benchmark for stablecoin reserve asset quality and attestations. And Circle, the issuer of USDC, has been a fast follower. Both now only hold Treasuries or bank balances, provide more details in their attestation and publish them reasonably promptly every month.
Tether has faced many questions about the commercial paper in its reserves, although it claims the proportion has been significantly reduced to $3.7 billion in July from $30 billion a year earlier, with plans to remove the asset class entirely. Until now, Tether provided its attestation reports quarterly and very late but says it plans to move to monthly with the BDO appointment. However, as of today, the most recently published attestation is dated March 31.
In a statement today, Paolo Ardoino, Tether CTO, said, “Tether’s commitment to transparency is not something new.” Had it appointed a top tier accounting firm earlier and published reports more regularly, that might have been more obvious.
Meanwhile, one of the notorious backing assets in the recent past was a billion-dollar loan to crypto lender Celsius. The lender is now bankrupt, but its $841m loan from Tether was settled through collateral when Celsius failed to meet a margin call. However, because this happened in the 90 day run-up to the Chapter 11 filing and there are some legal gray areas around digital asset collateral, Celsius lawyers want to revert the transaction making Tether an unsecured creditor.