Tether and Kraken Transparency Audits Aimed at Boosting Further Confidence Into The Crypto Markets

Tether Holdings Limited has released its June 2022 Assurance Consolidated Reserves Report. The debate on the reserves held by Tether has been ongoing, with Tether asserting that its tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s reserves.

According to its latest Consolidated Reserves Report as of June 30, 2022, Tether Management asserted that the Group’s consolidated assets exceeded its consolidated liabilities. Total assets were reported as US$66.41 billion, and total liabilities were US$66.22 billion, of which US$66.20 billion was related to digital assets.

In comparison to the Consolidated Reserves Report as of March 31, 2022, the Group’s consolidated assets were reported as US$82.42 billion, and total liabilities were US$82.26 billion, of which US$82.19 billion was related to digital assets. 

A further look at Tether’s Group consolidated assets showed that as of June 30, 2022, Cash & Cash Equivalent & Other Short-Term Deposits & Commercial Paper totalled US$52.88 billion compared to US$70.59 billion as of March 31, 2022. Corporate Bonds, Funds & Precious Metals, Other Investments and Secured Loans were US$ 13.53 billion, as of June 30, 2022, compared to US$ 11.83 as of March 31, 2022.

As of June 30, 2022, Tether held US Treasury Bills worth US$28.86 billion compared to US$39.20B as of March 31, 2022. Commercial Paper and Certificates of Deposit were reported as US$8.40 billion compared to US$20.10 billion in March 2022.

The latest Independent Auditors Report was compiled by BDO Italia, the Italian member firm of BDO global organization; a top-five ranked global independent public accounting firm. Going forward, Tether has advised that it shall release its reserve attestations from a quarterly basis to monthly reports.

The idea of transparency within the crypto space has not only been embraced by token issuers. Kraken, the cryptocurrency exchange, has pioneered the concept of a “Proof of Reserves” Audit. According to Kraken: “A Proof of Reserve audit is a trail-blazing accounting procedure that cryptographically verifies cryptocurrency holdings and account balances”.

Kraken held its first proof of reserves audit in February 2022, verifying its clients’ Bitcoin and Ethereum holdings. On August 11, Kraken shared the results of its second proof of reserves audit. The second proof of reserves audit, which covered 63% of Kraken’s total assets, included five new additional assets: USDT, USDC, XRP, ADA and DOT. The results were verified by the top-25 global accounting firm, Armanino LLP. Kraken plans to include additional assets in future audits.

Following the collapse of several crypto lenders this year, crypto companies are expected to do more to regain the trust that may have been lost. Transparency audits are one way of boosting stakeholder confidence in the crypto markets.