Tether is now one of the biggest money market funds in the world, holding more commercial paper than companies like Amazon and Google. According to JP Morgan analysts, although Tether might prefer the simpler solution of holding their USDT reserves with US banks, they have been pushed into a corner because of their limited access to such banks caused by their reputation for shady behavior, including, in the past, misrepresenting the sufficiency and quality of those USDT reserves. The kind of big banks that could accommodate a material portion of these reserves, including JP Morgan themselves, would likely steer clear of Tether due to reputational risk concerns.
And speaking of stablecoins, some may be finding it challenging to maintain their fiat (i.e., USD) pegs. I’ve had some discussions on LinkedIn about how real some of this “untethering” (in the case of USDT) is, given that some data sources show that everything is business as usual. In any case, JP Koning has pointed out that the TerraUSD algorithmic stablecoin is one of them that is struggling (see first figure below). It’s currently #5 on the stablecoin league table. Also, USDT has been struggling (see second figure).
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