- Tether, the issuer of the $82 billion USDT stablecoin, plans to buy bitcoin (BTC) for its reserves using realized profits.
- The company reported $1.48 billion in net profits for 2023 Q1 and disclosed $1.5 billion worth of BTC holdings.
Tether to Purchase Bitcoin Using Realized Profits for Stablecoin Reserves
Tether, the leading stablecoin issuer, has announced its new investment strategy to regularly acquire bitcoin (BTC) for its stablecoin reserves. This move aims to focus on the largest cryptocurrency by market capitalization. The company plans to allocate up to 15% of realized profits, excluding unrealized price appreciation, to purchase BTC and add it to the reserve surplus. Notably, Tether will handle the custody of the BTC without the involvement of third-party custodians.
Diversification of Reserves with Bitcoin Investment
Last week, Tether disclosed its holdings, revealing $1.5 billion of BTC and $3.4 billion of gold among the assets backing the value of USDT and other stablecoins. The remaining 85% of reserves are held in cash and cash-like assets, including U.S. Treasury bonds, according to their 2023 Q1 attestation. With this new BTC purchase campaign, Tether aims to strengthen and diversify its stablecoin reserves while capitalizing on the price appreciation potential of bitcoin.
Embracing Bitcoin as a Transformative Technology
Paolo Ardoino, Tether’s Chief Technology Officer, expressed confidence in bitcoin’s long-term value and growth potential. He stated that the investment in bitcoin not only enhances the portfolio’s performance but also aligns Tether with a transformative technology. By focusing on realized profits from investment operations, the company aims to consider only tangible gains from asset sales or reimbursements, disregarding unrealized capital gains.
Additional Investments and Stablecoin Stability
Aside from BTC, Tether has also prioritized investments in communication systems, energy, and bitcoin mining infrastructure. These efforts reflect the company’s broader interests in supporting the development of related technologies. While Tether has faced criticism in the past for its lack of transparency and controversial investment decisions, its flagship token, USDT, has established itself as a safe haven during periods of market volatility.
In contrast to other stablecoins, USDT maintained its price stability during the U.S. regional banking crisis, thanks to its perceived disconnection from U.S.-based banks.
Tether’s decision to utilize realized profits to purchase bitcoin for its stablecoin reserves demonstrates a strategic move to enhance the portfolio’s performance and diversify its assets. By leveraging the potential of bitcoin as a long-term store of value, Tether aims to align itself with transformative technology. As stablecoins continue to play a crucial role in the cryptocurrency ecosystem, Tether’s commitment to transparency and strategic investments contributes to the stability and growth of the industry as a whole.