Tether Pledges to Invest 15% of Its Operating Profits Every Month Into Bitcoin
In the latest move, stablecoin issuer Tether has recently unveiled its new investment strategy focused particularly on Bitcoin (BTC). As part of the initiatives towards diversifying its reserves and bolster them further, Tether is planning to allocate a substantial portion of its profits in purchasing Bitcoin regularly.
Over the period of time, this strategic shift could help Tether become one of the largest holders of Bitcoin. Tether’s USDT is the largest stablecoin in the crypto market with a market cap of $82 billion. This also makes the USDT as the third-largest cryptocurrency by market cap.
USDT is one of the most-widely used digital assets by crypto traders and investors and also has been the go-to source of liquidity in the crypto space. It helps investors to navigate the market volatility along with facilitating fund transfers across crypto exchanges.
As per the new investment plan, Tether plans to leverage the stability of Bitcoin along with harnessing its potential as a long-term store of value. As said, under the plan, Tether is willing to allocate a total of 15% of its net realized profits into Bitcoin. This will be in addition to the existing $1.5 billion that the company holds as Bitcoin reserves.
Tether is planning to adopt a prudent as well as conservative investment strategy and also seeks to bolster the resilience of its reserves while diversifying its investment portfolio.
In the official announcement, Tether noted: "Starting this month, Tether will regularly allocate up to 15% of its net realized 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”.
Tether is committed maintaining the security of its BTC holdings and thus keeps the possession of the private keys holding its Bitcoin reserves, thereby ensuring complete control over them. This also enhances Tether’s credibility and trustworthiness among its users.
By adopting this Bitcoin accumulation strategy Tether could challenge the likes of MicroStrategy to becoming the largest corporate holder of Bitcoins. Furthermore, this development also highlights the growing prominence of BTC as a mainstream asset as well as its growing acceptance among major institutions.
Tether gave an impressive result for the first quarter ending March 2023 wherein it reported a net profit of $1.5 billion. The company also reported stablecoin reserves in excess of $2.44 billion.