Tether Says It Will Use 15 Percent of Its Profits to Buy Bitcoin; Aims to Diversify Reserves

Most investments coming to cryptocurrencies are aimed at diversifying the financial portfolios of individual as well as institutional investors. Tether has become the latest company from the Web3 world to have decided to invest some of its business profits into purchasing cryptocurrencies to strengthen and diversify its reserves. The issuer of the largest stablecoin USDT, Tether has decided that it would use 15 percent of its profits to acquire Bitcoin, which is the most expensive crypto asset to exist in the world as of now.

“Starting this month, Tether will regularly allocate up to 15 percent of its net realised 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,” the 2014-founded stablecoin company wrote in an official blog post on May 17.

At the time of writing, BTC was trading at the price point of $27,327 (roughly Rs. 22.5 lakh) as per the crypto price tracker

Tether disclosed its treasury reserve touched an all-time high $2.44 billion (roughly Rs. 20,128 crore) in the first quarter of 2023 between January and March. The company has also showed that its BTC holdings currently stand at $1.5 billion (roughly Rs. 12,375 crore).

“The decision to invest in Bitcoin is underpinned by its strength and potential as an investment asset. Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential. Its limited supply, decentralised nature, and widespread adoption have positioned Bitcoin as a favoured choice among institutional and retail investors alike,” Paolo Ardoino, CTO of Tether, said in a statement.

Tether aims to capitalise on the growth potential of Bitcoin, the price of which spiked as high as $68,000 (roughly Rs. 56 lakh) in 2021.

After the development came into the limelight, the price of Tether shot up with small profits. At the time of writing, USDT was trading at $1 (roughly Rs. 82) true to its nature as a stablecoin.

after years of opaque business practices and questions regarding the state of its reserves, Tether has been working on improving transparency with the public.

In October 2022, Tether eliminated commercial paper from its reserves in order to shore up its treasury reserves and expand the use cases of the blockchain technology in its day-to-day operations.