Tether To Strengthen Reserves with Bitcoin (BTC) Purchase Using Realized Profits
Tether International Limited (Tether), the company behind the popular stablecoin USDT, has announced its latest investment strategy designed to bolster its reserves portfolio. Tether plans to allocate up to 15% of its net realized operating profits toward the purchase of Bitcoin (BTC) on a regular basis, aiming to enhance its reserves and diversify its holdings.
In its Q1 2023 Assurance Report, Tether disclosed that it already held approximately $1.5 billion worth of BTC in its reserves as of March 2023. Unlike many institutional investors who rely on third-party custody services, Tether follows the principle of “Not your keys, not your bitcoin” and personally holds the private keys for all of its Bitcoin holdings.
Under the new approach, Tether will focus solely on utilizing realized profits from its investment strategy, disregarding unrealized capital gains resulting from price increases. This means that only tangible gains from operations, such as the difference between the purchase price and net proceeds from sales or reimbursements, will be considered.
Tether’s decision to invest in BTC aligns with its conservative and prudent investment approach aimed at strengthening, expanding, and diversifying its reserves. By implementing this framework, the company seeks to enhance transparency and provide a clearer view of its performance and capital allocation strategy.
Paolo Ardoino, the Chief Technology Officer of Tether, expressed the rationale behind the investment, stating,
“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset. Bitcoin has proven its resilience and emerged as a long-term store of value with significant growth potential. Its limited supply, decentralized nature, and widespread adoption have positioned Bitcoin as a favored choice among institutional and retail investors alike.”
Tether believes that Bitcoin has exhibited substantial investment potential over the past decade, with impressive returns and increasing recognition from major financial institutions. Incorporating Bitcoin into its investment strategy allows Tether to capitalize on the digital asset’s growth potential while leveraging its position as a trusted financial infrastructure provider. This move demonstrates Tether’s confidence in the cryptocurrency market and its commitment to supporting the broader ecosystem.
While Tether also engages in smaller investments using its own capital, the company is particularly focusing on developing communication infrastructure through technologies like Holepunch, as well as energy and bitcoin mining infrastructure.
Tether remains committed to stringent risk management practices to ensure the stability and security of its operations. The company emphasizes its dedication to maintaining the stability of its flagship stablecoin, Tether (USD₮).
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