Tether, the company behind the largest stablecoin, Tether (USDT), is following MicroStrategy’s footsteps in terms of managing its reserves, as it plans to boost its reserves by buying Bitcoin to move away from US government debt.
15% of profits
In an announcement on May 17, 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 allocate up to 15% of its net realized operating profits to the Bitcoin market.
Earnings and stocks
The announcement comes after Tether’s quarterly financial report, which showed that it had a net profit of $1.5 billion.
According to Tether, it will keep all of its Bitcoin in self-storage.
We note that at the end of the first quarter of 2023, Tether had $1.5 billion in Bitcoin available, which is about 2% of its total reserves. 85% of its reserves were in cash, cash equivalents and other short-term deposits, primarily Treasury bills.
Price appreciation, resilience, limited quantity, decentralization and adoption
Tether said BTC is an obvious choice, as the leading cryptocurrency has proven to be a long-term value-retaining asset.
The stablecoin issuer made particular reference to the mammoth rise in Bitcoin’s price over the past decade, as well as its resilience against traditional financial failures.
Also, in a statement, Tether’s chief technology officer Paolo Ardoino pointed out that the world’s first and largest cryptocurrency is backed by its potential as an investment asset.
He added that Bitcoin’s limited quantity, decentralized nature and widespread adoption have positioned it as a favored choice among both institutional and retail investors.
The comparison with MicroStrategy
MicroStrategy has a similar Bitcoin investment plan, actively replacing the US dollar in its holdings with Bitcoin.
Although MicroStrategy does not have a fixed time frame for its BTC investment, Tether plans to do so at the end of each month.
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