The latest Tether news is that the company behind the leading stablecoin in the market USDT, is looking to allocate a portion of its profits towards the purchase of Bitcoin.
The “investment strategy [is] aimed at further strengthening its reserves portfolio,” Tether said in a press release published on Wednesday. According to the announcement, the Bitcoin purchases will start this month.
Tether looks to diversify and strengthen its reserves
Tether’s reserves included $1.5 billion in BTC as of March this year, and the new purchases are targeted at strengthening and diversifying these reserves. Tether announced in October 2022 that it had cut commercial paper from its reserves to zero. Instead, it increased investments in US Treasury Bills as it looked to ensure USDT’s 1:1 backing to the USD had the most secure reserves.
Paolo Ardoino, the CTO of Tether, noted in a statement that the decision to invest in BTC is down to the benchmark cryptocurrency’s “strength and potential as an investment asset.”
He pointed to Bitcoin’s resilience and the fact that the “digital gold” is now seen as a long-term store of value. Apart from that, it has shown significant growth potential, with fundamental factors such as limited supply, decentralised nature, and widespread adoption positioning it as an investment asset of choice for a growing number of institutional and retail investors.
Commenting further on Tether’s BTC move, Ardoino noted:
“Our investment in Bitcoin is not only a way to enhance the performance of our portfolio, but it is also a method of aligning ourselves with a transformative technology that has the potential to reshape the way we conduct business and live our lives.”
Even though the company will allocate up to 15% of its profits to regular BTC purchases, the total Bitcoin holdings in USDT reserves will not grow to exceed the stablecoin issuers’ Shareholder Capital Cushion.Tether will also not custody its Bitcoin with any third party provider, but take control of its holdings as part of the philosophy of “Not your keys, not your bitcoin.“
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