Tether Commits to Bitcoin Investment, Allocating 15% of Net Profits

  • Tether have announced their intention to allocate 15% of their earned net operating profits towards investing in Bitcoin (BTC).
  • Tether’s preference for investing in Bitcoin compared to other assets, Ardoino highlighted the distinctive features of Bitcoin

What is Tether?

Tether is an organization that has introduced various stablecoins to the financial market. Tether’s stablecoins operate on the foundation of blockchain technology. With a significant presence in the cryptocurrency industry, this entity is primarily recognized for its stablecoin called USDT, often referred to as Tether.

Tether invests in Bitcoin

Tether, the prominent issuer of stablecoins and the company responsible for the USDT token, has recently disclosed the accumulation of $2.5 billion in surplus reserves. Additionally, they have announced their intention to allocate 15% of their earned net operating profits towards investing in Bitcoin (BTC), the leading cryptocurrency in the market.

As per a recent statement, Tether has revealed that its surplus reserves represent an additional value of approximately 3% beyond the minimum 100% reserves required to support its circulating stablecoins. These reserves generate income through the interest rates obtained from Tether’s significant portfolio of U.S. Treasury bills and other investments, such as gold.

Tether’s primary product, USDT, presently has a circulating supply of tokens worth $82.84 billion. According to the company, each token is fully backed by cash or short-term investments at a 1:1 ratio. Tether’s CEO, Paolo Ardoino, stated that the decision to maintain these surplus reserves highlights their dedication to guaranteeing the stability and robustness of their stablecoin product.

Why invest in Bitcoin?

When asked about Tether’s preference for investing in Bitcoin compared to other assets, Ardoino highlighted the distinctive features of Bitcoin. He characterized Bitcoin as the embodiment of a robust and reliable monetary system, commending its decentralized nature and limited supply.

Presently, the total worth of Bitcoin held in Tether’s portfolio is significantly lower than their surplus reserves, specifically around $1.5 billion compared to $2.5 billion. Ardoino expressed the company’s intention to sustain this pattern, allocating only a maximum of 15% of their net operating profits for ongoing Bitcoin acquisitions.

In the most recent attestation report as of March 31, 2023, Tether disclosed that approximately 2% of its portfolio consisted of Bitcoin holdings. The company has subsequently made a declaration regarding their dedication to utilizing a maximum of 15% of their monthly net operating profits, which include realized profits from investments such as T-bills, to acquire Bitcoin and add it to their excess reserves.

In the previous week, Tether announced a net profit of $1.5 billion for the first quarter of the current year, surpassing its performance in the corresponding period of 2022 by more than twice. Alongside the net profit revelation, the company divulged its allocations to Bitcoin (BTC) as well as investments in physical gold, overnight repo, and corporate bonds. Their holdings in precious metals amounted to $3.3 billion.

Related to Tether

As per Tether’s disclosure, the majority of their investments, roughly 85%, are allocated to cash, cash equivalents, and other short-term deposits. Gold and Bitcoin make up approximately 4% and 2% of the total reserves, respectively.

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