Leading stablecoin issuer, Tether, plans to bolster its reserves by investing in Bitcoin, pivoting away from United States government debt securities.
Without much fanfare, Tether has started reinvesting some of their profits/excess reserves into Bitcoin. How much have they acquired in Q1, you ask? Just around 52,670. pic.twitter.com/NI3N0oICOz
— girevik (@girevik_) May 10, 2023
The company announced on May 17th that it aims to allocate up to 15% of its monthly net realized operating profits towards Bitcoin purchases.
This development follows closely after Tether’s recent quarterly financial report, which disclosed a net profit of $1.5 billion.
Tether’s USDT saw its market capitalization surge from $66 billion to over $82 billion in the first quarter.
Meanwhile, bank deposits shrank by over 90% to $481 million. The remaining deposits are distributed across several banks as a risk mitigation strategy against potential bank failures, a fate that has befallen some competitors.
Tether boosted its investment in United States Treasury bills to over $53 billion, making up 64% of its reserves. Now, 85% of the USDT token is backed by cash, cash equivalents, and short-term deposits.
For the first time, Tether also disclosed its holdings of gold and Bitcoin in this quarter’s report, highlighting its commitment to transparency.
By the end of the first quarter of 2023, Tether had accumulated $1.5 billion in Bitcoin, representing approximately 2% of its total reserves.
Tether will retain all its Bitcoin in self-custody, endorsing Bitcoin as a proven long-term store of value. The company attributes this decision to Bitcoin’s remarkable price appreciation over the past decade and its robustness against traditional financial downturns.
Paolo Ardoino, Tether’s Chief Technology Officer, reinforced Bitcoin’s credibility as an investment asset. Citing its limited supply, decentralization, and widespread adoption, Ardoino asserted that Bitcoin remains a favored choice among institutional and retail investors.
This strategic move aligns Tether with MicroStrategy, another major player that has been steadily converting its U.S dollar reserves into Bitcoin. However, unlike MicroStrategy’s indefinite timeframe, Tether intends to make its Bitcoin investments at the end of each month.
