If this assessment is confirmed, the assets of the issuer of the largest stablecoin by capitalization USDT may exceed its liabilities by $1.6 billion
Tether is tentatively estimating first quarter 2023 earnings of $700 million, according to CNBC. Thus, the total amount of excess reserves of the company exceeded $1.6 billion, Paolo Ardoino, CTO of Tether, told the publication.
Tether, a cryptocurrency startup, anticipates a $700 million profit for the March quarter, bringing its total excess reserves to over $1 billion, according to the company’s technology leader, who shared the most recent data with CNBC for the first time.
The USDT stablecoin is produced by Tether and is linked 1:1 to the US dollar. USDT is always 1:1 redeemable with the US dollar because it is backed by tangible assets like fiat money and US Treasury securities.
Tether issues a stablecoin USDT, which is pegged to the US dollar. USDT reserves are held in fiat currencies and US Treasuries. Previously, commercial securities were included in the security of the token, but in October 2022, the company reported that it had completely withdrawn them from the USDT security.
Tether generates income through fees, investments in digital tokens and precious metals, and lending to other institutions.
Trades between cryptocurrencies can be made using stablecoins without having to exchange funds back into fiat money.
Stablecoin issuers have come under fire over the years for not being open enough about the types of assets they keep in reserve to support their digital currency. Tether held commercial paper, which is a type of company-issued, short-term unsecured debt. Tether, however, remained mum regarding the nature of the businesses or the region from which they had acquired the loan.
In February, Tether reported that it made a profit of $700 million in the fourth quarter of 2022. The company’s total assets, after deducting liabilities, were $960.6 million at that time.
In the event that this year’s first-quarter earnings estimate is confirmed, the company’s excess reserves will reach $1.66 billion. According to Ardoino, this money will remain in Tether for further capitalization of the stablecoin.
USDT is the largest stablecoin in terms of capitalization, among all cryptocurrencies in this indicator it ranks third after bitcoin and Ethereum. As of March 24, the capitalization of the asset is $78.8 million. Since the beginning of March, it has grown by more than $7 billion – from $71.7 billion.
The growth of the capitalization of the Tether token takes place against the backdrop of problems with its largest competitor, the USDC stablecoin from Circle. The firm faced a significant outflow of funds from the asset following the collapse of Silicon Valley Bank (SVB), in which it held part of the reserves. USDC temporarily lost its peg to the dollar, and users rushed to get rid of it. Since March 10, USDC capitalization has decreased by $9.2 billion, from $43.7 billion to $34.5 billion.
