The majority of cryptocurrency investments are made with the intention of diversifying the financial assets of both individual and institutional investors. Tether is the newest Web3 company to choose to use some of its revenue from business to buy cryptocurrencies in order to build up and expand its reserve assets. The largest stablecoin USDT’s issuer, Tether, has made the decision to buy Bitcoin, the most costly crypto asset currently in existence, with 15% of its income.
On May 17, the stablecoin business, which was established in 2014, published a blog post, stablecoin company stated that, “Starting this month, Tether will regularly allocate up to 15 percent of its net realised operating profits towards purchasing Bitcoin (BTC). Tether anticipates that the current and future BTC holdings in its reserves will not exceed the Shareholder Capital Cushion and will further strengthen and diversify the reserves.”
In the first quarter of 2023, from January to March, Tether revealed that its treasury reserve achieved an all-time high of $2.44 billion (approximately Rs. 20,128 crore). The firm has additionally disclosed that it currently holds $1.5 billion (or around Rs. 12,375 crore) in BTC.
Paolo Ardoino, CTO of Tether, stated in a statement that, “The decision to invest in Bitcoin is underpinned by its strength and potential as an investment asset. Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential. Its limited supply, decentralised nature, and widespread adoption have positioned Bitcoin as a favoured choice among institutional and retail investors alike.”
Tether wants to make profit from Bitcoin’s growing potential, whose price reached a peak of $68,000 (approximately Rs. 56 lakh) in 2021.
Tether’s price jumped with marginal gains when the development gained attention. True to its status as a stablecoin, USDT was trading at $1 (around Rs. 82) at the time of writing. Tether has been attempting to increase public transparency after years of complex business practises and concerns about the condition of its reserves.
Tether stopped holding commercial paper in its reserves in October 2022 in order to strengthen its treasury reserves and increase the applications of blockchain technology in its daily operations.