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- Tether is not taking into account the unrealized price appreciation of its reserve assets.
- The stablecoin issuer has stated that it will self-custody all of its Bitcoin holdings.
On Wednesday, Tether, the issuer of the stablecoin, announced its intention to commence regular acquisitions of Bitcoin (BTC) for its stablecoin reserves, utilizing a portion of its profits for this purpose. This initiative is part of a new investment approach focused on the largest cryptocurrency by market capitalization.
Tether
#Bitcoin
Beginning this month, Tether will consistently allocate up to 15% of its net realized operating profits to buy Bitcoin. These Bitcoin will be regarded as additional to the minimum reserve assets that fully back tether tokens.
Morehttps://t.co/7zC2swgwWH pic.twitter.com/BOcSDjjmDf
— Tether (@Tether_to) May 17, 2023
#BitcoinTether has revealed that it will dedicate up to 15% of its realized investment profits to acquiring Bitcoin and will incorporate these tokens into its reserve surplus. However, the stablecoin issuer is not considering the unrealized price appreciation of its reserve assets. Tether has confirmed that it will self-custody all of its Bitcoin holdings, opting not to engage any external custodians.
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According to the company:
“Tether believes in the philosophy ‘Not your keys, not your bitcoin’ and takes possession of the private keys associated with all of its Bitcoin holdings.”
Significant BTC Acquisition Each Month
Tether recently reported a net profit of $1.5 billion for the first quarter, which is approximately 2% of its reserves, making this announcement timely. Cash and short-term deposits, often in the form of Treasury bills, comprised nearly 85% of the total.
If the same net profit continues, the company would be acquiring around 2,775 BTC, valued at approximately $74 million each month moving forward. The issuer anticipates that its current and future BTC holdings in reserves will not exceed the Shareholder Capital Cushion, thereby enhancing and diversifying its reserves.
The firm also views Bitcoin as a strong investment, having demonstrated itself as a dependable store of value over time with notable returns throughout the years.
