Tether Expressed, Tether releases quarterly information about the composition of its reserves backing issued tether tokens

Adam Cochran replied, “You’ll see a lot of mixed takes on this today. But, this is roughly the kind of backing model I would have guessed, and I am personally more comfortable using Tether because of it. For what it is worth, this breakdown is actually much better than how banks back assets.”

He further pointing to how no business can run on 1:1 direct backing on only cash and be safe without doing something with those assets, as secure operations cost money. So they put those assets to work.

Tether has claimed they are backed 1:1 not strictly cash backed 1:1. Seeing this type of breakdown is good. I get worried when anyone tries to claim they have too much idle cash in reserves.

In finance “cash equivalents” are called that because they are as good as cash while doing other things. The reason for this is “cash” isn’t as secure as you think it is unless you hold the physical paper in your own vault.

Many times if you try and withdraw cash in volume from a bank they can’t service it. So the risk of equivalents is the same as cash but they are more productive assets.

75% in cash reserves and equivalents is basically the inverse of banks. Banks in the US are only required to keep 10% in reserve ratio as cash or cash equivalents.

Having multiple assets also means they can spread out the risk of having any one mode of backing fail. Which can happen even in big financial systems.

I honestly expected to see a lot more secured loans or corporate bonds on this list. Like I would have been ok if those started to reach the 30% mark.

The conclusion was that:  The risk does not invalidate crypto. 

Though the report does not look transparent, Paolo claims it is by stating:  Tether_to all-in for transparency.  Can’t beat this. Also, stated, crypto community asked. We delivered Unrivaled transparency.

Paolo also had his say about the Elon Musk stir:  In retrospect I was growing quite worried in the past weeks by the enormous influence that Elon had on Bitcoin and crypto with all that tweeting. Glad we took off the band-aid. Bitcoin needs periodic shock-tests to grow stronger!