USDT stablecoin issuer Tether cut its reserves allocation to commercial paper by more than one-fifth between September and December last year, dropping from around $30.5 billion to $24.16 billion.

Tether is legally required to disclose its reserves every quarter as part of an $18.5 million court settlement with the Office of the New York Attorney General from February 2021. The firm was alleged to have misrepresented the specific amount of fiat backing USDT in 2017 and 2018.

The latest attestation was conducted by Cayman Islands-based accountants MHA Cayman and provides a breakdown of Tether’s reserves as of 31 December 2021.

The report states that Tether’s “consolidated assets exceed its consolidated liabilities,” however, the difference is minimal with total assets tallied $78.67 billion while liabilities sat at around $78.53 billion.

The makeup of Tether’s reserves shifted significantly since its prior report from late September, with cash and bank deposits dropping 42% to 4.187 billion, while its allocation to money market funds increased 200% to $3 billion, and its Treasury bills also grew 77.6% to $34.52 billion.

The significant amount of commercial paper backing Tether’s reserves — which hit 65.39% as of May 2021sparked criticism from onlookers who have questioned the lack of transparency regarding the origins of the paper and its credibility as an investment. There were also concerns last year that Tether may be exposed to the Evergrande crisis via commercial paper holdings, although Tether said this was not the case.

Commercial paper is often issued by large corporations and is used for financing payroll and short term-liabilities. It is referred to as unsecured debt as it is usually not backed by any form of collateral.

Tether’s attestation states that $13.93 billion worth of its commercial paper has a maturation window of 0–90 days, $9.94 billion has 91–180 days and $823 million has between 181 and 365 days. Any commercial paper with a maturation period longer than 270 days (nine months) must be registered with the U.S. Securities and Exchange Commission (SEC).

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According to data from Coingecko, USDT’s market cap sits at $79.47 billion at the time of writing, with its biggest competitor USD Coin (USDC) sitting at around $52.7 billion.