- Tether is not factoring in the unrealized price gain of its reserve assets.
- The stablecoin issuer has said that it would self-custody all of its Bitcoin assets.
On Wednesday, stablecoin issuer Tether said that it will begin making regular purchases of Bitcoin (BTC) for its stablecoin reserves. Thus, spending a portion of its earnings to do so. As part of a new investment strategy centered on the world’s biggest cryptocurrency by market value.
Tether
#Bitcoin
Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin. These Bitcoin shall be considered on top of the minimum reserves assets that 100% back tether tokens.
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— Tether (@Tether_to) May 17, 2023
Tether has announced that it would allocate up to 15% of its realized investment gains towards the purchase of Bitcoin and add the tokens to its reserve excess. The stablecoin issuer, however, is not factoring in the unrealized price gain of its reserve assets. Tether has said that it would self-custody all of its Bitcoin assets, rather than utilize any external custodians.
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.”
Massive BTC Purchase Every Month
Tether recently declared a first-quarter net profit of $1.5 billion, or around 2% of its reserves, thus this news follows closely on its heels. Cash and short-term deposits (often in the form of Treasury bills) accounted for almost 85% of the total.
Assuming the same net profit, this company would be purchasing around 2775 BTC, worth around $74M every month going forward. The reserves will be strengthened and diversified by the issuer’s anticipation that the present and future BTC holdings in its reserves will not surpass the Shareholder Capital Cushion.
The firm also thinks Bitcoin is a great investment. Since it has shown itself to be a reliable store of wealth over the long run with impressive returns over the years.