Tether Says Profit Rose to a Record During the First Quarter

(Bloomberg) — Tether Holdings, founded in the British Virgin Islands and the largest stablecoin operator, lost 4.5 billion yen in the first quarter, largely due to interest earned on its U.S. Treasury holdings and rising bond prices. The company announced that it had recorded a record net profit of $20 million. Bitcoin and gold.

The market value of Tether’s USDT token has risen to more than $110 billion as demand for stablecoins has increased during the recent cryptocurrency bull market. The company said in a statement Wednesday that it issued more than $12.5 billion in USDT during the same period, and that about $1 billion of the profit came from “net operating income” primarily from interest payments on U.S. Treasuries.

A stablecoin is a type of cryptocurrency that typically aims to maintain a one-to-one value with a fiat currency, such as the dollar. They are typically backed by cash and cash equivalents. Tether announced that it increased its direct and indirect holdings of U.S. Treasuries in the first quarter, now exceeding $90 billion. Most of the reserves backing the stablecoin are held in U.S. Treasuries, from which Tether makes money from the interest paid.

Tether said that apart from the gains from U.S. Treasuries, the rest came from mark-to-market gains from its Bitcoin and gold holdings. BDO had approximately $5.4 billion in Bitcoin and $3.7 billion in precious metals at the end of the quarter, according to third-party verification from BDO. Bitcoin prices rose significantly at the beginning of the year, ending the first quarter up around 66%.

Third-party attestations differ from financial audits because they are limited to a point-in-time snapshot and do not allow full access to a company’s books. The quality of assets backing stablecoins such as USDT has come under increased scrutiny in recent years as regulators have grown concerned about the liquidity of operators’ reserves and their ability to withstand large redemption demands under market pressure. It becomes.

Tether agreed in February 2021 to issue quarterly reports on its reserves as part of a settlement with U.S. authorities over allegations that it concealed capital losses and lied about its reserves over the past several years.

Tether announced on Wednesday that its net assets at the end of March were $11.37 billion, a “significant increase” in value from $7.01 billion at the end of last year.

The company also announced this week that it has invested $200 million in BlackRock Neurotech, a maker of brain-computer interface technology. According to the company’s quarterly report, its investment portfolio is $5.1 billion.

(Updated results include a breakdown of results starting in the second paragraph.)

©2024 Bloomberg LP

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