Tether, the company behind the largest stablecoin Tether (USDT), is following in MicroStrategy’s footsteps to manage its reserves. The stablecoin issuer plans to bolster its reserves with the help of Bitcoin (BTC) and move away from US-based government debt.
In a May 17 announcement, Tether revealed that it plans to invest a portion of its profits in BTC on a monthly basis. The company said that it will “regularly put up to 15% of its net realized operating profits towards the purchase of Bitcoin.”
The announcement comes a week after the company’s quarterly financial report, in which the stablecoin issuer reported $1.5 billion in net profit.
According to a company statement, Tether will keep all your Bitcoin in self-custody. By the end of the first quarter of 2023, it will have $1.5 billion in Bitcoin, which is around 2% of its total reserves. 85% of the holdings were in cash, cash equivalents and other short-term deposits, mainly treasury bills.
Tether claimed that BTC was an obvious choice, as the market-leading cryptocurrency has proven to be a long-term store of value assets. The stablecoin issuer cited Bitcoin’s huge price rise over the past decade and its resilience in the face of traditional financial failures for the decision.
It’s a statement, Tether CTO Paolo Ardoino stated that the world’s first and largest cryptocurrency stands on its potential as an investment asset. He added that Bitcoin’s limited supply, decentralized nature, and widespread adoption have positioned it as a “favorite choice among institutional and retail investors alike.”
MicroStrategy has a similar Bitcoin investment plan, actively substituting the US dollar in its reserves for Bitcoin. Although MicroStrategy does not have a fixed term for its investment in BTC, Tether plans to do so at the end of each month.
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