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Stablecoin issuer Tether has announced plans to purchase Bitcoin with 15% of realized operating profits routinely.
Tether International Limited (Tether) seeks to further consolidate its reserves by purchasing Bitcoin (BTC) with its operating profits. An official post states that beginning this month, the stablecoin company will regularly allocate up to 15% of its realized net operating gains toward BTC purchases.
The report also states that Tether does not see current and future BTC holdings in its reserves exceeding the Shareholder Capital Cushion. Thus, the stablecoin issuer seeks to consolidate, grow and diversify its reserves.
In its first-quarter Assurance Report, Tether revealed that its reserves held roughly $1.5 billion in BTC as of the end of March. The company also said it holds the private keys linked to all of its Bitcoin holdings.
Tether CTO Expounds on Bitcoin Purchase Scheme
Speaking on Tether’s decision to purchase Bitcoin with the platform’s surplus funds, chief technical officer Paolo Ardoino explained:
“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset. Bitcoin has continually proven its resilience and has emerged as a long-term store of value with substantial growth potential.”
“[Bitcoin’s] limited supply, decentralized nature, and widespread adoption have positioned Bitcoin as a favored choice among institutional and retail investors alike.”
The Tether CTO further said the company’s Bitcoin investment does not only improve its portfolio but aligns the stablecoin issuer with a “transformative technology”. Ardoino believes this revolutionary technology could potentially restructure “the way we conduct business and live our lives”.
The Tether company said BTC’s sustained impressive track record underscores the leading digital currency’s investment potential. Furthermore, the company noted that the crypto’s increasing mainstream recognition has solidified its status as an essential component in diversified investment portfolios.
Tether will focus exclusively on deploying investment strategy realized profits to fuel its Bitcoin-investing agenda. By subsequently disregarding price-induced unrealized capital gains, the company considers only tangible operational gains.
Tether’s planned BTC purchases are part of a broader conservative and informed approach to investment decisions. Furthermore, by routinely shoring up on Bitcoin, the stablecoin issuer seeks to reflect transparency and capital allocation strategy clarity.
Q1 2023 Assurance Report
On Wednesday, May 10th, Tether’s published Assurance Report showed a reserve surplus at a record high of $2.44 billion. Furthermore, the company reported an increase of $1.4 billion in net profit for the first three months of the year.
Tether closed the first quarter with $81.8 billion in consolidated total assets, with most of its investments remaining highly liquid.
Ardoino expressed pleasure at the company’s overall Q1 2023 performance and said Tether’s Q2 outlook was positive. The CTO added that the stablecoin issuer would monitor asset risk-adjusted returns on an ongoing basis and tweak accordingly. Ardoino also reassured customers that Tether would not expose their funds to high-risk scenarios amid an uncertain global economy. The company seeks to double down on what worked well in the first quarter while also exploring other prime opportunities in the digital asset space.