Although Tether claims that each USDT is 100% backed by reserves, these reserves are not exclusively held in U.S. dollars in cash. Instead, they are composed of a diversified portfolio of assets denominated in USD or considered cash-equivalent, such as U.S. Treasury bills, precious metals, cryptocurrencies, and secured loans. This means that while Tether aims to maintain a 1:1 peg with the U.S. dollar, the actual reserves supporting USDT may vary in liquidity and risk profile, depending on their composition at any given time.
Although Tether claims that each USDT is 100% backed by reserves, these reserves are not exclusively held in U.S. dollars in cash. Instead, they are composed of a diversified portfolio of assets denominated in USD or considered cash-equivalent, such as U.S. Treasury bills, precious metals, cryptocurrencies, and secured loans. This means that while Tether aims to maintain a 1:1 peg with the U.S. dollar, the actual reserves supporting USDT may vary in liquidity and risk profile, depending on their composition at any given time.
