Analysis of Asset Reserve Quality and Potential Risks of USDT Stablecoin

The asset reserve structure of stablecoins is usually similar to that of money market funds, primarily composed of cash and high-quality short-term bonds. During the 2008 financial crisis, even the Reserve Primary Fund, which had a scale of 63 billion USD, triggered market panic simply because it held 1.2% of Lehman Brothers' short-term bonds. This event led investors to withdraw 123 billion USD from money market funds within two weeks, highlighting the similar vulnerabilities of stablecoins and money market funds when facing a crisis of confidence.

To assess the stability of USDT, two key issues need to be considered: how liquid its asset reserves are and whether it may face large-scale redemptions similar to those in the 2008 money market fund crisis.

From the perspective of asset reserve quality, USDT has been improving its structure. The proportion of commercial paper (CP) has gradually decreased, while the share of U.S. short-term Treasury bills (T-Bill) has been continuously rising. According to the latest data, the proportion of CP has dropped to around 13%, while the proportion of T-Bill may have exceeded 60%. In addition, the quality of CP held by USDT is also improving, with over 99% of CP rated at AAA level.

In terms of liquidity, USDT has recently undergone a severe test. Within a month, USDT has completed $17 billion in redemptions, reducing its circulation by 20%. Especially during the most panicked times in the market, USDT processed $10 billion in redemption requests in just a few days, demonstrating its strong liquidity management capabilities.

However, in extreme situations, such as more than 80% of the issuance being redeemed within a week, USDT may face the risk of decoupling. However, the likelihood of this happening is low for the following reasons:

1. USDT has deeply integrated into the cryptocurrency ecosystem, with many trading pairs and financial activities relying on it. It is estimated that at least 20% of USDT holders find it difficult or are unwilling to withdraw easily.

2. The redemption mechanism of USDT limits the speed of large-scale withdrawals, and only certified institutions can directly exchange with the issuer.

3. 85% of the USDT reserves are cash and cash equivalents, most of which are highly liquid T-Bills that can be quickly converted to cash.

4. The market arbitrage mechanism can stabilize the USDT price to a certain extent, and historically, the decoupling of USDT has usually been temporary.

5. Market participants in the cryptocurrency market have relatively high confidence in USDT, often leading to speculative buying during price fluctuations.

In summary, although the risk cannot be completely ruled out, the possibility of a USDT crash is relatively low. However, there are still some behaviors in the market that attempt to profit by spreading negative information. Investors should remain vigilant and view market fluctuations rationally.