USDT is fully backed by the reserves of the Tether Group. As of March 31, 2023, the reserves comprise cash and bank balances (1%), US Treasuries (66%), Money Market Funds (9%), Overnight & Term Reverse Repos (10%) and a combination of corporate bonds, investments, secured loans and commercial papers (13%).
For off-chain collateral, we rank storage methods as follows (best to worst)
With regulated custodians not in off-shore jurisdictions
With regulated custodians in off-shore jurisdictions (e.g, BVI, Bahamas, Taiwan)
Others / Undisclosed
Tether refuses to disclose the names of banks and custodians it partners with for custody of reserves. Based on information available in the public domain, we know that Bahamas-based Deltec Bank & Trust, Ansbacher (Bahamas) Limited and Capital Union Bank, and Taiwan-based Far East International Bank, are or have been banking partners of Tether.
Tether does not maintain segregated accounts for assets held on behalf of USDT holders. Tether’s assets are distributed across several associated entities. These assets are not bankruptcy remote.