Yesterday, stablecoin issuer Tether released an attestation regarding its reserves-the amount of assets that "back" each coin. It's the first such attestation from Tether in years, and it hasn't exactly reassured the skeptics. According to the document-which consists of Tether's own report, plus a statement from a small Cayman Islands accounting firm called Moore Cayman-as of February 28, Tether had around $35.3 billion in assets and $35.2 billion in liabilities. $35.1 billion of those liabilities "relate[d] to digital tokens issued," which is to say they were backing the Tethers in circulation at that time. It's a gesture toward transparency from a company that's faced intense scrutiny for its evasiveness in the past. The New York State Attorney General's office recently concluded its long-running probe into Tether's operations and fined the company $18.5 million as part of a settlement agreement. The new document isn't nothing, but it doesn't mean there aren't any outstanding questions. According to the attestation, Tether had $35.3 billion on February 28, supporting the $35 billion in Tether circulating at that time. But what about before the 28th? As part of its investigation into Tether, the New York AG's office determined that a previous "transparency update" regarding Tether's reserves was "misleading" - the note included a bank statement, but didn't disclose that many of the funds had been deposited in the bank that same morning. Before that date, according to the Attorney General's office, it's unclear how much money Tether actually had. Since the attestation only looks at a single moment in time, we can't know if that's what's going on here. A complete audit (which goes beyond an attestation) could provide a broader picture of Tether's holdings and examine activity over a longer period of time.

I suppose it could be seen as prudent to value digital assets at the lower of historical cost or fair value, but it isn't consistent with US GAAP or IFRS. Marketable assets should be valued at fair market price, not historic cost.

— (((Frances 'Not A Monster' Coppola))) 🌷🌷🌷 (@Frances_Coppola) March 31, 2021

So if the market value of the digital assets fell significantly after purchase, the value of the holding would be impaired. For example, in December Microstrategy reported that it had impaired the value of its BTC holdings by $70.7m. It only started buying BTC in August lol

— (((Frances 'Not A Monster' Coppola))) 🌷🌷🌷 (@Frances_Coppola) March 31, 2021