Tether Nears $100B Cap with Record $2.85B Profit: Stablecoin's Growth Surge

• Tether's Record Profits and Asset Growth
• Further Investment Gains
• Tether's Reserve Assets and Liabilities
• USDT's Stablecoin Dominance
• Tether's Diverse Portfolio
• Concerns Regarding USDT

Tether's Record Profits and Asset Growth

Stablecoin issuer Tether$1.000 -0.12% has announced an unprecedented $2.85 billion in profits during the last quarter, as its flagship token USDT approaches a $100 billion market capitalization. The most recent quarterly report issued on Wednesday reveals that $1 billion of this profit was derived from the interest generated by Tether's substantial investments in the U.S. Treasury, reverse repo, and money market funds. These assets serve to underpin the stability of the USDT stablecoin.

Further Investment Gains

In addition to interest, Tether's other investments, such as in Bitcoin$42,260 -0.64% (BTC) and gold, have primarily contributed to the remaining profit. In the past year, Tether recorded $6.2 billion in net operating profits, of which $4 billion came from interest on its Treasury holdings. Tether has experienced direct benefits from the Federal Reserve's ongoing strategy of raising interest rates to combat inflation, which has increased returns from the fixed-income investments made by Tether.

Tether's Reserve Assets and Liabilities

According to the recent quarterly attestation signed by BDO Italy, Tether disclosed assets in reserve totaling $97 billion against $91.6 billion in liabilities as of December 31. This results in $5.4 billion of surplus reserves underpinning Tether's stablecoins.

USDT's Stablecoin Dominance

With an all-time high market capitalisation of $96 billion, Tether's USDT has solidified its position as the leading stablecoin and a vital component in the crypto market. Its market capitalisation has increased by more than $10 billion since late October, driven by a resurgence in digital asset trading. The current 22-year high in U.S. interest rates also benefits Tether, as it does not distribute the yield earned on reserves to USDT holders.

Tether's Diverse Portfolio

Beyond USDT, Tether also issues various other digital currencies pegged to fiat currencies and gold. Recently, it has expanded its investment portfolio to include Bitcoin mining, artificial intelligence, and telecommunications.

Concerns Regarding USDT

Over the years, questions regarding the quality of assets underpinning USDT have caused concern within the crypto markets. However, Howard Lutnick, chairman and CEO of Wall Street investment bank Cantor Fitzgerald, which manages some of Tether's assets, refuted these claims earlier this month. Lutnick confirmed that Tether does indeed hold the funds it claims to support the stablecoin.

Edited by Jonathan Stoker