According to Tether’s blog post, “Today, in addition to dismissing the recent cycle of Tether FUD that’s hitting the rumor mill, Tether is announcing starting from now, throughout 2023, it will reduce secured loans in Tether’s reserves to zero.”
Tether revealed its plans to remove secured loans in 2023 in response to widespread concern about the stablecoin issuer’s growing number of loans.
At the beginning of December, WSJ reported that Tether has increased its lending activity by loaning out USDT tokens to eligible customers. These loans amounted to 9.1% of Tether’s holdings after hitting the $6.1B mark in September 2022.
The firm recently came under fire for its lack of disclosure and limited transparency. Tether also briefly lost its peg with the USD after FTX declared bankruptcy.
These developments led to the crypto community speculating whether Tether will be able to maintain enough liquid assets to pay redemptions in case of another market crisis.
Addressing the recent FUD about Tether’s operations, the firm claimed that it will wind down its lending services. The issuer of USDT added these short-term secured loans were “over collateralized and covered by extremely liquid assets.”
