AICPA just published an exposure draft document that discusses how we should be thinking of the sufficiency of assets for the redemption of stablecoins. The organization is asking for feedback on this document.
This reminded me of the very brief analysis of stablecoins I’ve been working on in the past, and now wanted to share with my readers. Please note that the effective date is based on the latest audit report available on the website of the issuer. The latest audited data for Tether, for example, is two months old, for other stablecoins below the lag between the effective date of my analysis and today’s date is roughly one month.
Source: Transparency (tether.to)
Effective date of the analysis: 9/30/2023
Founded by: Tether
Issuer: Tether Holdings Limited
Auditor: BDO
Redemption: Tether (Tether Limited in the US and Tether International Limited outside of the US) redeems USDT. Only verified customers of Tether can redeem directly from Tether. Based on the terms of use:
“Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.”
Redeemable tokens outstanding: 83,153,363,663
Redemption assets available: 86,384,653,832
% of cash and cash equivalents in redemption assets: 89%
Note: As of the effective date, the issuer is a defendant in 3 ongoing civil litigations for which no reserves have been accrued.
Source: Centre Consortium; Transparency & Stability – Circle
Effective date of the analysis: 10/31/2023
Founded by: Coinbase and Circle
Issuer: the Circle Reserve Fund (the “Fund”) is a government money market fund under Rule 2a-7 of the Investment Company Act of 1940, as amended. Circle owns one hundred percent of the equity interests in the Fund represented by the Fund’s Net Asset Value (the “NAV”), held on behalf of USDC holders.
Auditor: Deloitte
Redemption: Currently, Circle Mint enables liquidity providers and qualified businesses to redeem USDC 1:1 for USD. However, it is only accessible to Institutional Traders, Exchanges & Wallets, and Fintechs.
Total supply: 29,695,000,686
Redeemable tokens outstanding: 24,668,300,827
Redemption assets available: 24,720,265,667
% of cash and cash equivalents in redemption assets: 83%
Source: Pax Dollar (USDP) Transparency Reports and Paxos Terms of Service
Effective date of the analysis: 10/31/2023
Founded by: Paxos
Issuer: Paxos Trust Company, LLC
Auditor: Withum
Redemption: Only account holders on the Platform can redeem USD Stablecoins for US dollars. Redemptions are processed on a one-for-one basis, subject to a minimum amount requirement set by the Company, and may take up to one business day to reflect in the account balance after passing compliance checks.
Redeemable tokens outstanding: 438,824,451
Redemption assets available: 445,266,577
% of cash and cash equivalents in redemption assets: 101%
Note: Originally my analysis included BUSD as well, but today with the limited remaining lifetime of this stablecoin (see here for details), I’ve decided to omit BUSD from this analysis.
