After the profits doubled, Tether decided to allocate 15% to increase its holdings of Bitcoin as a reserve asset

Interface News Reporter | Sima Linwei

On May 17th, Tether, the world's largest issuer of US dollar stable currency, announced that it will use a portion of its profits to regularly purchase Bitcoin (BTC) as its stable currency reserve starting this month. It will allocate up to approximately 15% of its realized investment profits (excluding any unrealized price appreciation of its reserve assets) to purchase Bitcoin and add these tokens to its reserve surplus.

Tether's Chief Technology Officer, Paolo Ardoino, said, "Bitcoin continues to demonstrate its resilience and has become a long-term value storage tool with enormous growth potential. Its limited supply, dispersed nature, and widespread adoption make Bitcoin the preferred choice for institutional and retail investors

Cryptocurrency is now an asset class with a market value of $131 billion and has become an important component of cryptocurrency infrastructure. By anchoring its price to fiat currency (usually the US dollar), it serves as a trading medium between fiat currency and cryptocurrency. The USDT issued by Tether Company is currently the world's largest stable US dollar with a market value of approximately 82 billion US dollars. According to its regulations, each USDT will anchor a market value of one dollar.

Earlier this month, Tether released a financial report audited by the public accounting firm BDOItalia, which showed a net profit of $1.5 billion in the first quarter, more than twice the previous quarter. Its combined total assets at the end of the first fiscal quarter were $82 billion, up from $67 billion at the end of 2022.

As of the end of March, Tether held more than $69 billion in cash and cash equivalents, of which $53 billion was short-term US treasury bond bonds. At the end of 2022, Tether holds $55 billion in cash and cash equivalents, of which $39 billion is short-term treasury bond. Tether currently holds $1.5 billion worth of Bitcoin and $3.4 billion worth of gold.

At the same time, the company emphasizes that its excess reserves have reached a historical peak. As of May 9, 2023, the company's management stated that the group's total comprehensive assets amounted to at least $81.8 billion, and its total comprehensive liabilities amounted to $79.3 billion, mainly derived from its issuance of cryptocurrency. Tether's excess reserves reached a historic high of $2.44 billion in the first quarter.

Tether's report is part of the latest certification conducted by BDOItalia accounting firm. Unlike a comprehensive audit, certification only records the financial condition of the company at a certain point in time. But the company has recently been accused of 'suspicious' claims for reserves. John Reed Stark, a former law enforcement lawyer at the US Securities and Exchange Commission, argues that the company's periodic unaudited certification is "meaningless".

The Wall Street Journal reported in March that Tether's company used false documents and shell companies, but Tether called this accusation "completely inaccurate and misleading". Unlike Circle, another stable currency issuer that faced turbulence during the US banking crisis, Tether has been criticized in the encryption industry for years due to its lack of transparency in reserves and controversial investment decisions.

However, the regional banking crisis in the United States has hit Circle's second largest stable dollar, the USDC. The sudden collapse of Silicon Valley Bank (SVB) caused some of USDC's cash reserves to freeze at the bank, temporarily losing the ability of this stable currency to be pegged to the US dollar. And another competitor, Paxos, which has issued the third largest US dollar stable currency BUSD, has given up this business under regulatory pressure in the United States, making Tether's USDT the top choice for cryptocurrency demand in the near future.
As of the time of publication, the latest quote for Bitcoin was $27332, a 24-hour increase of 0.55%.