IMPORTANT POINTS:
- Tether plans to allocate up to 15% of its profits to buying Bitcoin as part of its new investment strategy.
- The company already has around $1.5 billion in Bitcoin reserves.
- These Bitcoin purchases could make Tether one of the top BTC holders, alongside MicroStrategy.
Since its launch in 2014, Tether (USDT) has become one of the leading cryptocurrencies in the sector. The stablecoin is used by traders and investors as a means to move funds between cryptocurrency exchanges and to hedge against market volatility.
Tether Limited, a blockchain company behind the USDT stablecoin, with a market capitalization of over $82 billion, announced on Wednesday, May 17, that it plans to make regular Bitcoin purchases for its stablecoin reserves using a percentage of its profits. The move is part of Tether’s new investment strategy that will increasingly focus on Bitcoin.
The blockchain company said that it intends to allocate around 15% of its earnings from investments to buy BTC and add the cryptocurrency to surplus reserves.
“Starting this month, Tether will regularly allocate up to 15% of its net trading profits towards the purchase of Bitcoin. Tether anticipates that the current and future holdings of BTC in its reserves will not exceed the Share Capital and will further strengthen and diversify the reserves.”
Before implementing its new investment strategy, Tether already had around $1.5 billion in Bitcoin reserves, as documented in its Q1 2023 collateral report. Meanwhile, the USDT issuer said it believes in the philosophy. from “not your keys, not your bitcoin”, which means that it takes care of the private keys linked to all your BTC purchases.
Tether’s plans to allocate such a significant portion of its profits to buy Bitcoin would see the company become one of the largest owners of BTC, alongside MicroStrategy.
In a recent interview, MicroStrategy founder Michael Saylor said that Bitcoin is the king commodity and a perfect replacement for fiat money, which he says is “dying”.
In its announcement, Tether claimed that the planned Bitcoin purchases are part of its conservative and prudent approach to investment, which it hopes will strengthen and diversify its reserves.
Earlier this year, Tether revealed that it made $1.48 billion of net profit in March from its USDT trade, bringing its total excess reserves to $2.44 billion.
USDT is the largest stablecoin in the world, with a circulating supply of more than $82.8 billion.
