Banking crisis: Tether withdrew nearly $5 billion to protect itself!

The banking crisis that has been raging for a few weeks in the United States has affected several crypto companies. Faced with this situation, Tether has taken measures to protect its assets. The issuer of the stablecoin USDT discussed the latter in a press release published on May 15.

Tether avoids suffering the same fate as its competitors

As Tether promoters are suspected counterfeiters, the stablecoin issuer makes an important announcement. He revealed that he withdrew about $4.8 billion in bank deposits during the first quarter of this year. This enabled it to reduce its exposure to banks. He said he made the decision to avoid the risks associated with the banking crisis that shook his competitors. Now, the stablecoin issuer USDT has only $481 million in anonymous banks.

In fact, Tether had $5.3 billion in bank deposits at different institutions at the start of the year. That said, the stablecoin issuer invested the withdrawn funds in two types of products. These are US Treasury bills and overnight repo transactions backed by these bills. As of now, stablecoin issuer USDT holds $7.5 billion in overnight repos.

Furthermore, Tether has published information about its precious metal and crypto reserves. It appears that the crypto firm keeps 4% of its USDT reserves in gold. At the same time, around 1.8% of these are held in bitcoin (BTC).

A look back at what triggered the banking crisis

Tether has minimized its exposure to banks after the simultaneous collapse of several major US financial institutions. It all started in March with the bankruptcy of the three banks Silvergate, Silicon Valley (SVB) and Signature.

Circle, the issuer of the stablecoin USDC, is among the crypto businesses that have been affected by the collapse of the SVB. Indeed, USDC lost its peg to the US dollar amid rumors of Circle exposure to SVB. But, the stablecoin ended up regaining this peg to the dollar.

Tether’s announcement comes sometime after it revealed it posted $1.5 billion in first-quarter profits. By revealing this information, the issuer had unveiled a plan to reduce its exposure to traditional bank deposits.