Tether, the popular stablecoin issuer, has recently announced a new investment strategy that involves purchasing Bitcoin (BTC) using a portion of its net operating profit. The company aims to strengthen and diversify its reserves portfolio through this move.
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.
— Tether (@Tether_to) May 17, 2023
In their blog post, Tether International Limited revealed they would allocate up to 15% of their realized net operating profit regularly for purchasing Bitcoin. This approach will help Tether enhance its reserves without surpassing the Shareholder Capital Cushion.
While many institutional investors rely on third-party custody for their Bitcoin holdings, Tether follows a different philosophy. They firmly believe in the principle of “Not your keys, not your Bitcoin” and take possession of the private keys associated with all their Bitcoin holdings.
Under the new investment strategy, Tether will focus solely on realized profits, disregarding unrealized capital gains from price increases. The company will consider tangible gains, which include the difference between the purchase price and net proceeds from sales or reimbursements for maturing investments.
This decision to invest in Bitcoin aligns with Tether’s conservative and prudent approach to strengthening and diversifying its reserves. Paolo Ardoino, the CTO of Tether, emphasized Bitcoin’s resilience, potential, and long-term store of value, making it an attractive investment asset. Bitcoin’s limited supply, decentralized nature, and widespread adoption have garnered significant attention from institutional and retail investors.
Tether Capitalizes on Bitcoin’s Growth Potential
Tether plans to capitalize on the growth potential of the digital asset. It aims to utilize its reputation as a reliable financial infrastructure provider by integrating Bitcoin into its investment strategy. The company recognizes Bitcoin’s impressive returns over the past decade and its increasing recognition and adoption by major financial institutions.
Alongside Bitcoin investments, Tether Group also focuses on building communication infrastructure through technologies like Holepunch. They also invest in energy and Bitcoin mining infrastructure. To maintain the stability and security of its operations, the company is still dedicated to using strict risk management procedures.
Tether’s allocation of a portion of its net operating profit towards Bitcoin showcases confidence in the cryptocurrency market. This decision also highlights their commitment to supporting the broader ecosystem.
The company ensures the stability of its flagship stablecoin, Tether (USD₮). Additionally, it actively seeks innovative opportunities in the dynamic digital asset landscape.