Since its launch in 2014, Tether (USDT) has become one of the biggest players in the cryptocurrency world. The stablecoin is now widely used by traders and investors as a means to move funds between crypto exchanges and to hedge against market volatility.
Tether Limited, a blockchain company behind the USDT stablecoin with a market cap of over $82 billion, announced on Wednesday, May 17 it is planning to make regular purchases of Bitcoin (BTC) for its stablecoin reserves using a percentage of its profits. The move comes as part of Tether’s new investment strategy that will be increasingly focused on Bitcoin.
Specifically, the blockchain firm said it intends to allocate around 15% of its gains from investments to acquire BTC and add the cryptocurrency to the reserve surplus. This does not include unrealized price increases of its reserve assets, Tether noted.
“Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin (BTC). 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.”– Tether wrote in the post.
Before implementing its new investment strategy, Tether already held around $1.5 billion in Bitcoin reserves, as documented in its Q1 2023 Assurance report. Meanwhile, the USDT issuer said it believes in the “not your keys, not your bitcoin” philosophy, meaning it takes possession of the private keys tied to all of its BTC holdings.
Tether Could Become One of the Biggest Bitcoin Holders
Tether’s plans to allocate such a significant portion of its profits to Bitcoin purchases would make the company one of the biggest BTC holders, alongside MicroStrategy.
In a recent interview, MicroStrategy founder Michael Saylor’s former said he believes that Bitcoin is the king commodity and a perfect replacement for fiat money, which he claimed is “dying.”
In its announcement, Tether said the intended Bitcoin purchases represent a part of the company’s conservative and prudent approach to investing, which it expects would reinforce and diversify its reserves.
Earlier this year, Tether revealed it secured a $1.48 billion in net profit in March from its USDT operation, bringing its total excess stablecoin reserves to $2.44 billion.
USDT is the largest stablecoin in the world, with a circulating supply of more than $82.8 billion, according to data retrieved by Finbold.