The organization behind the most popular stablecoin, Tether
USDT
$1.00
, in order to manage its reserves, is imitating MicroStrategy. The stablecoin issuer intends to use Bitcoin to bolster its reserves.
BTC
$27,130 should steer clear of government debt issued by the United States.
Tether said in a statement on May 17 that it intends to monthly put some of its profits into Bitcoin. It was announced by the company that it will “regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin.”
The statement follows the firm’s quarterly financial report, in which the stablecoin issuer claimed net profits of $1.5 billion.
According to a statement from the company, Tether will keep all of its Bitcoin in self-custody. At the end of the first quarter of 2023, it has $1.5 billion in Bitcoin on hand, making up around 2% of its total reserves. 85% of the holdings were in cash, cash equivalents and other short-term deposits, primarily Treasury bills.
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Tether claimed BTC was an obvious choice since the market-leading cryptocurrency has proven to be a long-term store of value assets. The stablecoin issuer cited Bitcoin’s mammoth price rise over the past decade and its resilience against traditional financial failures for the decision.
In a statement, Tether chief technology officer Paolo Ardoino said that the world’s first and largest cryptocurrency is underpinned by its potential as an investment asset. He added that Bitcoin’s limited supply, decentralized nature and widespread adoption have positioned it as a “favored choice among institutional and retail investors alike.“
MicroStrategy has a similar Bitcoin investment plan, actively replacing the U.S. dollar in its reserves with Bitcoin. Although MicroStrategy doesn’t have a fixed time frame for its BTC investment, Tether plans to do it at the end of each month.
