Tether Made $6.2B Profit and Have New Challenges as Fed Cuts Rates

• Tether earned $6.2 billion last year, with most profits coming from US Treasuries, but faces challenges with Fed rate cuts.
• Tether’s collaboration with TRM Labs and Tron helped law enforcement freeze $12M in USDT linked to criminal activities.

According to Arkham data, Tether, the issuer of the world’s largest stablecoin, made an astounding $6.2 billion in earnings last year. The majority of these returns came from investments in US Treasuries, which are a safe and profitable option in an era of high interest rates.

However, as the Federal Reserve begins a phase of rate cuts, the financial landscape is altering. Tether presently holds $4.38 billion in Bitcoin (BTC), raising doubts about the company’s next move if US Treasury yields fall.

Tether made $6.2 Billion last year.

Most of their profit was from US Treasuries, but now the Federal Reserve is cutting rates.

They currently hold $4.38B in BTC.

What do you think they’ll do next? pic.twitter.com/IKZk9Mztyk

— Arkham (@ArkhamIntel) September 12, 2024

Tether Strategy Amid Shifting Financial Conditions 

Tether’s high profits demonstrate its capacity to produce significant money from strategic investments. However, as the Federal Reserve lowers interest rates, the profitability of their investments in government bonds is expected to fall.

The focus will now be on how Tether reacts to this shifting climate, particularly given its huge BTC holdings. Given Bitcoin’s price volatility, Tether may seek to maximize returns through alternative paths in the cryptocurrency market or continue to diversify its portfolio.

On the other hand, Tether has proved its expanding significance beyond financial gain, particularly in the fight against financial crime. CNF has reported on The T3 Financial Crime Unit (T3 FCU), which brings together TRM Labs’ anti-financial crime experience with Tron’s blockchain technology and Tether’s investigative capabilities.

This formidable coalition recently assisted law enforcement authorities in freezing more than $12 million in USDT connected to illegal activity prior to its formal launch.

Tether’s ability to spot and stop financial crimes involving digital assets demonstrates its active participation in preventing the abuse of stablecoins by dishonest actors, strengthening its position in the ecosystem of digital assets.

Furthermore, Tether continues to develop in the stablecoin sector. As we previously noted, the launch of a Tether stablecoin linked to the UAE dirham (AED) is part of the company’s efforts to increase transparency and provide a cost-effective hedge against currency swings.

This AED-pegged stablecoin, which is wholly backed by UAE reserves, is intended to promote economic growth in the UAE. It provides organizations and individuals with an efficient and secure method of making cross-border payments, conducting trade, and diversifying digital assets.