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Tether to buy Bitcoin based on monthly net profits

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Tether, the company behind the largest stablecoin Tether (USDT), is following in the footsteps of MicroStrategy to manage its reserves. The stablecoin issuer plans to strengthen its reserves with the help of Bitcoin (BTC) and move away from United States-based government debts.

In an announcement on May 17, Tether revealed that it plans to invest a portion of its profits into BTC on a monthly basis. The firm said it will “regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin.”

The announcement comes within a week of the company’s quarterly financial report, where the stablecoin issuer reported $1.5 billion in net profits.

According to a statement from the company, Tether will keep all of its Bitcoin in self-custody. At the end of the first quarter of 2023, it has $1.5 billion in Bitcoin on hand, making up around 2% of its total reserves. 85% of the holdings were in cash, cash equivalents and other short-term deposits, primarily Treasury bills.

Tether claimed BTC was an obvious choice since the market-leading cryptocurrency has proven to be a long-term store of value assets. The stablecoin issuer cited Bitcoin’s mammoth price rise over the past decade and its resilience against traditional financial failures for the decision.

Related: Circle CEO blames US crypto crackdown for declining USDC market cap

In a statement, Tether chief technology officer Paolo Ardoino said that the world’s first and largest cryptocurrency is underpinned by its potential as an investment asset. He added that Bitcoin’s limited supply, decentralized nature and widespread adoption have positioned it as a “favored choice among institutional and retail investors alike.“

MicroStrategy has a similar Bitcoin investment plan, actively replacing the U.S. dollar in its reserves with Bitcoin. Although MicroStrategy doesn’t have a fixed time frame for its BTC investment, Tether plans to do it at the end of each month.

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