Stablecoin issuer Tether has cut its holdings of commercial paper by 58% to $8.5 billion, with a further reduction to $3.5 billion expected at the end of the month as it seeks to tackle speculation about the quality of support for its dollar-pegged USDT token.
The company held $20.1 billion of commercial paper in May.
According to an update on Tether's website, it aims to bring the figure down to zero as it diversifies its holdings into U.S. Treasury bonds.
Commercial paper is short-term unsecured debt issued by companies. Its value depends on the companies that issue it. The quality of Tether's holdings has been the subject of speculation, calling into question how much backing the company can count on for USDT.
Last month, Tether denied it had any exposure to Three Arrows Capital, the hedge fund that was reported to be insolvent, sparking concern about its financial ties to other crypto companies.
In May, Tether published an attestation of holdings by independent accountants MHA Cayman. The report stated that Tether held $39.2 billion in Treasurys.
It also had $4.1 billion in bank deposits, $6.7 billion in money market funds and $3.1 billion in secured loans.
The market cap of Tether's USDT stablecoin has plunged to $66.1 billion from $82.2 billion since May due to an increasing amount of user redemptions following the collapse of the algorithmic stablecoin terraUSD (UST).
Hedge funds are placing short positions on Tether worth hundreds of millions of dollars, the Wall Street Journal reported.
Tether Chief Technology Officer Paolo Ardoino was quick to dismiss any concerns, labelling the report on hedge funds shorting USDT as spreading "FUD" (fear, uncertainty and doubt).