Tether expects $700 million in profit for the first quarter‍

According to Chief Technical Officer Paolo Ardoino, Tether Holdings Ltd., the company that issuing the largest stablecoin, anticipates making a profit of around $700 million for the current quarter.

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Similar results were announced by Tether for the three months ending in December. The USDT stablecoin's market cap has climbed by 18% to $78 billion since year-end. According to Ardoino in an interview on Wednesday, Tether anticipates having a $1.6 billion surplus at the conclusion of this quarter in the reserves it keeps to support the peg of USDT to the dollar.

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Since Tether spent the previous year reducing its holdings of commercial paper, the majority of those reserves are currently placed in narrow US Treasury bills, according to Ardoino. According to Ardoino, Deltec Bank & Trust Ltd. and Capital Union Bank of the Bahamas assist in managing Tether's reserves, and Cantor Fitzgerald serves as a custodian for its T-bill holdings.

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All financial decisions, risk management, and decision-making processes are internal, according to Ardoino, who also said that Tether has its own "investment team" in charge of managing its portfolio and that it intends to add more banking partners in the future. Capital Union and Deltec did not immediately respond to demands for comment, while Cantor Fitzgerald declined to do so.

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The circulation of USDT has increased significantly in recent weeks, primarily at the cost of USD Coin, its major rival from Circle Internet Finance Ltd. Earlier this month, when it was revealed that Circle held accounts linked to failing lender Silicon Valley Bank, the USDC token fell off its peg to the dollar.

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With Paxos's BUSD, another significant stablecoin, declining as a result of a US government crackdown, USDT now makes up approximately 60% of the market.

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Tether Makes Progress

As USDC's circulation started to drop in March, USDT's circulation rose.

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Digital tokens called "stablecoins," like USDT, are intended to maintain a 1:1 value with assets like the US dollar. Usually, this is done by retaining sizable cash reserves or other securities, like T-bills, as collateral. They are well-liked by traders who use them as a means of transferring money between exchange and as a refuge from price fluctuations, making them a crucial element in cryptocurrency marketplaces.

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Runs on altcoins can therefore be a severe danger to the operation of markets.

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The majority of the past year has been devoted to Tether's efforts to allay worries about its reserves, which must be liquid enough just to survive any potential spike in redemptions. When stablecoin TerraUSD collapsed in May, the collapse of USDT itself briefly ruptured its dollar peg.

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Instead of being utilized for trading, the company believes that nearly half of daily USDT holdings are used for transfers and as a "hedge against" national currencies, according to Ardoino.

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According to a February report, Tether had about $5.3 billion of its assets in money and financial deposits just at end of 2022, a decrease of almost 12% from the third quarter. The amount of current cash holdings was not disclosed by Ardoino.

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According to Ardoino, who is also the chief technology officer of the cryptocurrency exchange Bitfinex and the chief strategy officer of the peer-to-peer messaging network Holepunch, Tether may spend as much as 20% of earnings into other strategic ventures.