Tether's Excess Reserves Cut in Half Amid Gold and Bitcoin Price Drop
Tether's excess reserves have been cut in half over the past quarter, from $8.23 billion to $4.11 billion.
The decline is attributed to a drop in gold and Bitcoin prices, with gold falling by 14.1% and Bitcoin dropping by approximately 15%. Together, these two assets comprise around six times Tether's excess reserves, leaving it vulnerable to further erosion if their values continue to fall.
Tether had previously pledged to eliminate its secured loans in reserves, but instead they have increased from $6.1 billion in December 2022 to $13.45 billion as of June 30. The company also launched a lending fund called StableFund, which aims to raise up to $3 billion from third-party institutional investors.
The GENIUS Act, signed on July 18, defines the permitted reserve assets for approved stablecoin issuers and prohibits them from pledging or reusing their reserves. However, Tether plays multiple roles within StableFund, including sponsor, advisor, and issuer of funds transferred by the fund.