Tether buys bitcoin with net profit to back USDT stablecoin

Based on the company’s latest certification report, that amount equates to approximately $222 million. It provides a breakdown of the assets that make up USDT’s reserves, excess reserves, and profits.

A Tether spokesperson revealed that the bitcoins the company buys represent only a small portion of its overall net income, with the majority of excess revenue going to business operations, including bank fees.

“The goal is to maintain the value of our Bitcoin portfolio at a level significantly below the size of our total excess reserves, which stood at 2.48 billion at the end of Q1 2023, while 1.5 billion,” a Tether spokesperson said.

According to data from CoinGecko, USDT is the largest stablecoin on the market with over $82.8 billion in circulating supply. It competes with Circle’s USD Coin and Binance’s BUSD.

Stablecoins are used by traders to enter and exit various cryptocurrencies without transferring their money back into fiat currency.

“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset,” Tether Chief Technology Officer Paolo Ardoino said in a statement. “

“Bitcoin continues to prove its resilience and emerges as a long-term store of value with significant growth potential. Its limited supply, decentralized nature, and widespread Due to its widespread adoption, Bitcoin has become a preferred choice among both institutional and retail investors alike.

The move would make Tether an even bigger holder of Bitcoin – it already has $1.5 billion worth of Bitcoin on its balance sheet – and would make Tether an even bigger holder of Bitcoin, including the likes of Paul Tudor Jones and MicroStrategy. It will follow in the footsteps of high-profile investors such as Michael Saylor, boss of Tokens are not affected by currency depreciation or inflation.

Analysts and investors have previously told CNBC that Bitcoin could rise this year due to so-called “whales” – market participants with deep pockets who can buy up large amounts of tokens. Ta.

Tether’s method of preserving the value of its tokens at $1 has sparked controversy in the past due to concerns over the quality of its reserve assets. Previously, the company held large amounts of its reserves in commercial paper, a type of short-term unsecured debt issued by corporations. It is considered less secure than other forms of debt, such as U.S. Treasury bills.

Tether sought to allay investor concerns by eliminating commercial paper and replacing these funds’ holdings with only U.S. government bonds.

The company announced in February that it had reduced its commercial paper holdings to zero.

USDT and its issuer remain a source of controversy in the crypto market. The US Department of Justice is reportedly investigating Tether executives on suspicion of bank fraud.

Stablecoins have already become a hot topic for regulators, who are trying to figure out how to rein in the industry after several prominent companies in the space failed.

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