Leading stablecoin issuer Tether (USDT) reported a net profit of US$1.5 billion for Q1 2023, marking a whopping 110% growth on a quarter-on-quarter (QoQ) basis, according to a recent reserves report attested by BDO Italia. The report includes a comprehensive outline of Tether’s assets as of March 31, showing an increase in reserves to US$2.44 billion. It also lists various new categories including physical gold. The first quarter of 2023 saw Tether experiencing growth in terms of profit and the circulation of its token, which saw an increase of 20%.
Go Stable with Tether
Tether (USDT) is a stablecoin with the third largest market capitalization in the world and is pegged to the US dollar, making it ‘stable’. It is designed to provide stability in the volatile crypto market and is widely used as a means of transferring funds between different exchanges.
The primary strength of Tether is its stability, as its value is tied to the US dollar. It is also widely accepted and can be easily traded for other cryptocurrencies. However, the lack of transparency around Tether’s reserve backing has been a cause of concern for some investors.
Originally launched in July 2014 as Realcoin, a second-layer cryptocurrency token built on top of Bitcoin’s blockchain through the use of the Omni platform, it was later renamed to USTether, and then, finally, to USDT. In addition to Bitcoin, USDT was later updated to work on the Ethereum, EOS, Tron, Algorand, and OMG blockchains.
With a market capitalization of 6.213%, Tether holds the position of the third-largest cryptocurrency in terms of total value, which amounts to US$1.10 trillion in the crypto market. As of May 12, Tether’s market capitalization was more than US$82 billion, briefly reaching US$83 billion.
Stablecoin Bags Profit of US$1.5 Billion
The report published on Wednesday by accounting firm BDO Italia stated that “more than three-quarters of Tether’s cash-equivalents were stored in short-dated Treasuries, a popular asset among stablecoin issuers and cryptocurrency companies seeking to gain from the rise in yields from traditional financial markets such as bonds. That marked a slight uptick from its holdings in the previous quarter when such assets made up around 71% of Tether’s cash reserves. At the current rate of 5.23% for three-month bills, Tether would net around US$2.8 billion in earnings from such holdings.”
“Our main goal is that we show that we have the money, plus that the majority of what we are making in profits, we’re keeping in the company,” Paolo Ardoino, Tether’s chief technology officer, said in an interview on Wednesday.
The company’s total consolidated assets ended at US$81.8 billion, with the majority being invested in US Treasury Bills. Tether has also disclosed its plan to reduce its dependence on traditional bank deposits, choosing instead to engage with the Repo market. This move is aimed at ensuring enhanced safety and fluidity for its users.
In a post on its website, Tether said it has been seeking to “reduce its reliance on pure bank deposits” and leverage the repo market instead. A repo, short for repurchase agreement, refers to when financial institutions use U.S. Treasuries and other high-quality securities as collateral to raise cash, often overnight.
Tether continues to evaluate the global economic environment and has taken necessary steps to ensure that its customers’ funds are not exposed to high-risk scenarios. Looking ahead to Q2, the company has an extremely positive outlook and remains committed to transparency, which is why they have introduced new categories in the reserves’ breakdown in its quarterly report to provide even greater transparency to its users.