USDT stablecoin issuer Tether minimized exposure to banks by taking out billions of dollars worth of bank deposits in the first three months of 2023.
Tether announced in a May 15 press release that it withdrew over $4.8 billion in bank deposits in Q1 2023.
Tether Minimized Exposure to Banks
According to the document, the stablecoin issuer now has $481 million in bank deposits after keeping $5.3 billion in banks at the start of the year.
Tether said it minimized exposure to banks to protect itself from bank collapses despite holding deposits at different institutions. It did not specify the institutions holding deposits but attributed its decision to withdraw to its competitors’ plights amid the recent banking crisis.
Tether also withdrew deposits after seeing the plight of rivals holding too much money in bank deposits.
According to the press release, Tether sent the $4.8 billion to U.S. Treasuries and overnight repos secured by Treasuries. It now holds $7.5 billion in overnight repos.
The company also revealed precious metal and crypto reserves. According to public data, Tether keeps 4% of its USDT reserves in gold and about 1.8% in Bitcoin (BTC).
Circle Restores Lost USDC Peg
Tether may have distanced itself from banks because of the simultaneous collapses of several U.S. financial institutions. Three American banks, Silvergate Capital, Silicon Valley Bank (SVB), and Signature Bank, failed within one week in March.
The USDC stablecoin lost its peg to the U.S. dollar after news surfaced that its issuer held $3.3 billion in reserves at Silicon Valley Bank. Later, USDC regained 7% to snap back to $1.
SVB played a significant role for venture capital firms investing in the cryptocurrency industry. The bank’s clients included Andreessen Horowitz (a16z), Pantera Capital, Sequoia Capital, Blockchain Capital, Dragonfly Capital, and Castle Island Ventures.
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