Tether, the company behind the USDT stablecoin, has disclosed that it is poised to generate a remarkable profit of $700 million in the first quarter of 2023. In a recent interview, Paolo Ardoino, the firm’s Chief Technology Officer, unveiled that this profit would raise its excess reserves to an impressive $1 billion.
As traders become more drawn to stablecoins, such as Tether’s USDT, they allow for quick and easy movement in and out of different cryptocurrencies without the need to convert funds back into fiat currency.
However, concerns have been raised about the transparency of the assets that back these stablecoins, with some issuers criticized for being forthcoming.
The company has taken steps to address these concerns by moving its holdings from commercial assets to US Treasuries, considered more reliable assets. It also produces attestations, which are reports produced by an auditor to verify the reserves and assets that Tether holds.
Additionally, the company makes its money from various sources, including fees, investments in digital tokens and precious metals, and issuing loans to other institutions. The total value of USDT in circulation has grown substantially this month from $70.98 billion on March 1 to $78.14 billion on Thursday, according to CoinMarketCap.
Ardoino Defends Tether’s Record
This growth can be partly attributed to the collapse of Silicon Valley Bank, which caused Circle, the issuer of the rival stablecoin USD Coin, to reveal a $3.3 billion exposure to SVB. Investors became concerned about USDC’s stability and flocked to Tether.
However, after the US government guaranteed depositors, USDC regained its peg after it said the $3.3 billion reserve deposit held at SVB would be fully available to people.
Despite the criticisms that have been leveled at stablecoin issuers, Ardoino defended the company’s record and claimed that the company is profitable and able to weather financial crises. He also pointed out that Tether is making money while banks are failing, making it the safest choice among all available options.
Ardoino said:
Tether is making money, and banks are failing. So if you have to put money somewhere, I guess that Tether is the most safe among all the choices.
Tether’s estimated profit for the current quarter represents a significant milestone for the company, as it will take its excess reserves to over $1 billion for the first time. Once liabilities are subtracted, the company’s total assets amount to $960.6 million.
Tether’s success highlights the growing importance of stablecoins in the cryptocurrency market. As traders look for ways to move in and out of different cryptocurrencies quickly and efficiently, stablecoins like USDT provide a valuable bridge between fiat currencies and digital assets.
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