Tether To Purchase More Bitcoins For Stablecoin Reserves Using Realized Profits

TL;DR

• Stablecoin issuer Tether will regularly buy bitcoins for its reserves.

• The company will use a portion of its realized profits to purchase BTC starting this month.

Tether To Purchase More Bitcoins

Tether, the largest stablecoin issuer in the world, announced via a blog post on Wednesday that it would regularly buy bitcoins for its stablecoin reserves. 

According to the company, it would purchase the bitcoins using a portion of its profits starting this month as part of a new investment strategy focused on Bitcoin. 

Tether revealed that it would allocate up to 15% of its realized profits from investments to purchase BTC and will add the coins to the reserve surplus. The company stated that;

“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. As reflected in Tether’s Q1 2023 Assurance Report, as of the end of March 2023, Tether already held approximately $1.5 billion in BTC in its reserves. While it is common practice among many institutional investors to have third-party custody of their Bitcoin, Tether believes in the philosophy "Not your keys, not your bitcoin" and takes possession of the private keys associated with all of its Bitcoin holdings.”

This latest development comes after the company revealed last week that it holds $1.5 billion in bitcoins and another $3.4 billion in gold amongst the assets that back the value of its USDT and other smaller stablecoins. 85% of the company’s reserves are held in cash and cash-like assets, including US Treasury bonds. 

Tether has solidified its position as the leading stablecoin issuer in the world, with a market cap of over $80 billion. The recent banking crisis in the United States affected its closest rival, Circle, allowing Tether to pull clear of the others. 

The purchase of bitcoins is part of Tether’s campaign designed to strengthen and diversify its stablecoin reserve while also enjoying the price appreciation as an investment. 

 Paolo Ardoino, chief technology officer of Tether, said in a statement, commented that;

“Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential. Our investment in bitcoin is not only a way to enhance the performance of our portfolio, but it is also a method of aligning ourselves with transformative technology.”

Tether will be using realized profits from its investment operations to purchase Bitcoins.