Stablecoin issuer Tether revealed its plan to buy hundreds of millions of dollars worth of Bitcoin in the coming days. The company would allocate the purchased Bitcoin (BTC) to back the leading stablecoin USDT. Tether Limited’s recent attestation report stated it accumulated a net profit of 1.48 billion USD. According to the company’s plan, it’s going to invest approx 15% of its profit for BTC purchases. And it could do so almost every month—buy Bitcoin from its net profit.
The company’s recent assessment report noted a net profit of 1.48 billion USD in Q1 2023. Using 15% of the amount to buy Bitcoin would mean spending 222 million USD. It plans to use the crypto stash as a reserve to back its flagship stablecoin USDT. Other than spending a portion of the profit to purchase BTC, it would use the rest amount to allocate funds for other business activities.
Tether also reported holding 1.5 billion USD worth of BTC in its crypto holdings, which accounts for 2% of its overall stablecoin reserve backing USDT. Almost 85% of its reserves hold cash, cash equivalents, short-term deposits, primary treasury bills, etc.
USDT currently stands as the biggest stablecoin and third biggest cryptocurrency across the global cryptocurrency market in terms of market capitalization. According to CoinMarketCap data, the stablecoin holds a market cap of over 82.87 billion USD. Besides holding over the broader crypto market, the digital asset is quite popular among crypto investors as a vehicle to make it easy to step in and out within different crypto assets.
On the decision to Bitcoin investment, the chief technology officer of Tether, Paolo Ardoino, cited the strength and potential of “the world’s first and largest cryptocurrency” in terms of being an investment asset.
Arduino added that limited supply, decentralized nature, and adoption across the world all these factors make Bitcoin become one of the favorable assets to look for. Both institutional and retail investors favor cryptocurrency alike.
According to Tether, given the dominance and popularity of the leading cryptocurrency, it acts as a go-to option when choosing an asset with a long-term store of value. It cited the growth of Bitcoin in terms of market price to volume since its inception. During the time, it had also witnessed market crash circumstances but navigated through them.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/05/20/tether-plans-to-buy-bitcoin-btc-every-month-from-net-profit/