Tether to reduce secured loans to zero in 2023 amid battle against FUD

The move came in response to a wave of attacks from the mainstream media and the FUD, primarily from the Wall Street Journal.

The world's largest stablecoin issuer, Tether, has promised to end the practice of lending out of its reserves over time, saying it is "critical to restoring faith" in the crypto market.

In a December 13 post, the stablecoin issuer responded to recent FUDs (fear, uncertainty, and doubt) regarding its collateralized loans, among others that fell into the FUD gossip.

Tether confirmed that its collateralized loans are over-collateralized and backed by "extremely liquid assets" and also added that the firm will be liquidating these loans during 2023, stating:

Tether announces that starting now, during 2023, it will reduce the secured loans in Tether reserves to zero.

Secured Tether loans work similarly to private banks lending to customers using secured collateral, the company explained. However, unlike fractional reserve banks, Tether claims that its loans are more than 100% secured.

The move is likely in response to a Wall Street Journal report earlier this month that argued that the loans were risky and that "the company may not have enough liquid assets to pay out in a crisis."

This is not the first time the WSJ has been targeted by Tether. In August, the publication said that Tether could be considered "technically insolvent" if its assets fell by only 0.3%. The stablecoin issuer then denied these accusations, saying that it increased the legitimacy and transparency of its attestations by hiring top 5 audit firms.

According to these attestations, 82% of Tether's reserves are held in "extremely liquid" assets.

In October, Tether responded to further media reproaches by ditching commercial securities in its reserves and replacing investments with US Treasury bills.

In its latest statement, the company clarified that it will end its lending business without loss and continue its mission of prioritizing transparency and accountability.

“We will continue to demonstrate Tether’s resilience in the most uncertain of times, despite the fabrications and misinformation fabricated by Tether Truthers and other mainstream media click-bait headlines that have been consistently wrong about Tether for nearly a decade.”

Tether is currently the leading stablecoin issuer with 65.8 billion USDT in circulation. According to CoinGecko, its market share is 46.6%.