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Tether Bolsters Stability with Bitcoin Investment
Stablecoin provider Tether has announced its intention to acquire a significant amount of Bitcoin, worth hundreds of millions of dollars, to diversify the reserves supporting its world-leading stablecoin.
Tether🧡#Bitcoin
— Tether (@Tether_to) May 17, 2023
Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin. These Bitcoin shall be considered on top of the minimum reserves assets that 100% back tether tokens.
More 👉 https://t.co/7zC2swgwWH pic.twitter.com/BOcSDjjmDf
Tether aims to invest 15% of its net profit into Bitcoin to diversify the assets that back its USDT token, which maintains a 1-to-1 peg with the U.S. dollar. Based on Tether's most recent attestation report, this investment would amount to approximately $222 million.
It is important to note that Tether clarified the Bitcoin purchases would only represent a small fraction of its overall net profit, with the majority of excess income allocated to covering operational expenses, including bank fees. With a circulating supply exceeding $82.8 billion, USDT currently holds the title of the largest stablecoin in the market, outpacing competitors such as Circle's USD Coin and Binance's BUSD, according to CoinGecko data.
Tether's decision to bolster its reserves with Bitcoin acquisitions reflects digital assets' growing prominence and integration into the global financial landscape. By diversifying its reserves, Tether aims to strengthen the stability and credibility of its stablecoin while aligning with the increasing demand for cryptocurrencies.
Furthermore, this development follows Tether's recent disclosure that it holds over $1.5 billion worth of Bitcoin and $3.4 billion worth of gold among the assets backing the value of USDT and its other stablecoins. The majority of Tether's reserves, around 85%, consist of cash and cash-like assets, including U.S. Treasury bonds, according to its Q1 attestation for 2023.
Tether's move to diversify its reserves further solidifies the stablecoin's position in this rapidly expanding sector of the cryptocurrency market.
What is Tether:
Tether is the most widely adopted coin in circulation. USDT was the first-ever stablecoin introduced to the market. It is designed to peg its issued coin 1-to-1 with the Dollar. Tether was one of the first stablecoins issued in several blockchains, available on the Tron, ETH, Omni, EOS, Algorand, Solana, and the Binance Smart Chain (BSC) networks. It has received mass adoption as the reserve currency for most traders as it doesn’t fluctuate like typical crypto coins.