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- Tether has made a groundbreaking announcement about its investment strategy.
- BTC has taken center stage as Tether has revealed plans to buy the cryptocurrency regularly.
- Tether allocated the profits and chose to keep the bitcoins earned for themselves.
pregnancyA prominent stablecoin issuer, has revealed a new investment strategy to bolster its stablecoin reserves with Bitcoin (BTC), the leading cryptocurrency in market capitalization. The company announced on Wednesday that it will start buying BTC regularly using a portion of its profits starting this month.
In this investment initiative, Tether intends to allocate up to approximately 15% of its realized earnings from investments, excluding any unrealized price appreciation of its reserve assets, to acquiring BTC. These newly acquired tokens will be added to the excess reserve.
As opposed to relying on third-party custodians, Tether will guard the BTC cache itself, as stated in their announcement. By maintaining direct control over the custody of these assets, the Company aims to enhance its operational and oversight independence.
Bitcoin, gold and US Treasury bonds bring back Tether’s $5 billion assets
This latest development comes on the heels of Tether’s recent disclosure that it holds significant amounts of BTC and gold, worth $1.5 billion and $3.4 billion, respectively, as part of its portfolio of assets.
These assets back Tether’s primary stablecoin, USDT, and its smaller stablecoin counterparts. Company 2023 Q1 certification It confirms that approximately 85% of its reserves are held in cash and cash-like assets, including US Treasury bonds.
stablecoinsrepresenting a massive $131 billion asset class, plays a significant role in the cryptocurrency ecosystem by facilitating seamless trade and transactions between government-issued fiat currencies and digital tokens.
These stablecoins maintain a fixed value tied to an external asset, usually US dollars, which ensures price stability.
Tether CTO highlights Bitcoin’s long-term potential
Tether’s Buy BTC campaign aims to strengthen and diversify its stablecoin reserves while capitalizing on the investment potential of Bitcoin’s rising price, as explained in their press release.
Paolo Arduino, Chief Technology Officer of Tether, emphasized Bitcoin’s resilience and long-term value proposition, saying: “Bitcoin has consistently demonstrated its resilience and emerged as a long-term store of value with significant growth potential. Our investment in Bitcoin is not only a way to improve the performance of our portfolio, but also a means To align ourselves with transformative technology.”
on the flip side
- Tether’s decision to regularly buy Bitcoin against its stablecoin reserves could help diversify the asset and take advantage of its higher price.
- While Tether’s self-custody approach to storing earned BTC shows the company’s desire for autonomy, skeptics suggest that using third-party custodians can provide an additional layer of security and trust.
Why should you bother
By consolidating and diversifying its reserves with BTC, Tether aims to capitalize on the potential price appreciation of the leading cryptocurrency while strengthening the role of stablecoins as essential building blocks in the cryptocurrency ecosystem.
For more on Tether’s efforts to boost its reserves as USDT gains surge in Q1, read here:
Tether strengthens reserves and USDT gains higher in Q1 wins
For a deeper dive into the reasons behind the alarms raised surrounding the new Ledger redemption service, check out this article:
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