Tether, the world’s largest stablecoin, said on Friday it had cut its commercial paper holdings by around 58% as part of an earlier commitment to reduce its exposure to riskier assets.
Stablecoins – a variety of cryptocurrencies designed to keep a steady value – are in sharp focus after the collapse of the TerraUSD token in May. Usually underpinned by reserves of assets such as the U.S. dollar, gold and government debt, stablecoins are widely used in cryptocurrency trading and Tether is the predominant medium for moving funds between crypto or into regular cash.
Tether’s reserves consist of U.S. Treasury bonds and commercial paper, which refers to short-term debt issued by companies.
The token has $8.4 billion of commercial paper and plans to reduce its holdings to $3.5 billion by the end of July, according to a statement.
The company aims to reduce its commercial paper holdings to zero, in a bid to address concerns about the quality of assets underpinning its token amid the crypto market meltdown.
Tether had slid below its 1:1 peg to the dollar in May before recovering, a fall that had sent shockwaves across the sector.