Tether Says Massive Reserves Held in Investment-Grade Commercial Paper

Tether Holdings Ltd. released the most detailed version yet of the assets backing its widely used digital currency, seeking to address regulatory concerns that it hasn’t previously disclosed enough about the currency’s underpinnings.

Tether is a stablecoin, a type of cryptocurrency designed to mimic the value of the U.S. dollar. Its use has exploded in recent years, making it the third most widely held cryptocurrency after bitcoin and ether.

Traders use tether to get in and out of other cryptocurrencies because of its ease of use and quick transaction times. Trading directly between the dollar and digital currencies often involves high transaction costs and delays in processing.

Using tether as a stand-in for the U.S. dollar allows cryptocurrency traders to buy and sell digital assets such as bitcoin quickly and with little fuss. The peg to the U.S. dollar is meant to give assurance that a tether is as safe as owning dollars.

Tether is used across different cryptocurrency exchanges and trading platforms, making it a widely accepted way to fund trading positions or to post as collateral for risky, leveraged investments.