Tether Uses 15% Of Its Net Realized Operating Profits To Purchase Bitcoin

Key Points:

• Tether intends to increase its reserves with the aid of Bitcoin and shift away from government obligations issued by the United States.
• The company indicated that it would dedicate up to 15% of its realized revenues from investments to purchasing BTC.
• The stablecoin issuer will not utilize any third-party custodians and will maintain all of its Bitcoin assets in its own hands.

Tether, the stablecoin issuer, has announced that it would acquire Bitcoin using 15% of its monthly earnings from investing in US government bonds. This is said to be part of an effort to lessen reliance on US government bonds.

The stablecoin issuer said in a May 17 corporate statement that it would self-custody the bought BTC, adding that its acquisition would concentrate only on realized profits from its investing strategy, ignoring unrealized capital gains earned by price rises.

“Tether believes in the philosophy “Not your keys, not your bitcoin” and takes possession of the private keys associated with all of its Bitcoin holdings.”

The news comes only a week after the stablecoin issuer declared $1.5 billion in net earnings in its quarterly financial report.

It has $1.5 billion in Bitcoin on hand at the end of the first quarter of 2023, accounting for around 2% of its total reserves. Cash, cash equivalents, and other short-term deposits accounted for 85% of the assets, with Treasury bills ranking first.

If the net profit remains constant, the company will purchase around $74 million, or approximately 2775 BTC, each month in the future. The issuer, on the other hand, anticipates that the existing and future BTC holdings in its reserves will not exceed the Shareholder Capital Cushion, therefore strengthening and diversifying the reserves.

According to CoinGecko, USDT is the market’s biggest stablecoin, with a circulating supply of more than $82.8 billion. It rivals Circle’s USD Coin and Binance’s BUSD.

Tether’s CTO, Paolo Ardoino, said in a statement that the world’s first and biggest cryptocurrency is supported by its potential as an investment asset. Bitcoin’s limited quantity, decentralized structure, and broad use have made it a preferred choice among institutional and retail investors alike, he noted.

In its statement, the company backed up this point of view. According to Tether, Bitcoin has shown its investment potential with a track record of strong gains over the last decade.

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Harold

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