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Tether, the organization responsible for the largest stablecoin Tether (USDT), is adopting a strategy similar to that of MicroStrategy in managing its reserves. The stablecoin issuer intends to enhance its reserves by incorporating Bitcoin (BTC) and reducing its reliance on government debts from the United States.
In a statement released on May 17, Tether announced its intention to invest a portion of its profits into BTC on a monthly basis. The company indicated that it will “regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin.”
This announcement follows closely after the company’s quarterly financial report, in which the stablecoin issuer disclosed $1.5 billion in net profits.
As per a statement from the company, Tether will maintain all of its Bitcoin in self-custody. By the conclusion of the first quarter of 2023, it held $1.5 billion in Bitcoin, representing approximately 2% of its total reserves. The remaining 85% of its assets were in cash, cash equivalents, and other short-term deposits, primarily consisting of Treasury bills.
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Tether asserted that BTC was a clear choice, as the leading cryptocurrency has demonstrated its capacity as a long-term store of value. The stablecoin issuer referenced Bitcoin’s significant price increase over the last decade and its durability against traditional financial crises as factors influencing this decision.
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In a statement, Tether’s chief technology officer Paolo Ardoino remarked that the world’s first and largest cryptocurrency is supported by its potential as an investment asset. He noted that Bitcoin’s limited supply, decentralized characteristics, and broad adoption have established it as a “favored choice among institutional and retail investors alike.”
MicroStrategy has a comparable Bitcoin investment strategy, actively substituting the U.S. dollar in its reserves with Bitcoin. While MicroStrategy does not have a set timeline for its BTC investments, Tether plans to execute its purchases at the end of each month.
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