
Tether International Ltd., which owns the third-largest cryptocurrency by market value, will utilize 15% of its net investment profit, equivalent to $222 million of its first-quarter profit, on Bitcoin to diversify Reserves supporting its dollar-to-USDT stablecoin.
Tether was fined in 2021 by U.S. regulators for misrepresenting its reserve backing, meant to keep it at 1:1 to the U.S. dollar. The company, which said last week that its assets total $85 billion, said that most of that was in the form of Treasury bills and that 85% of its assets were 'extremely liquid' in cash and cash equivalents. Tether's total stock was about 4% and 2%, respectively.
Tether said it doesn't expect its Bitcoin holdings to exceed its share capital cushion-reserves in excess of the customer liabilities from Tether's token issuances.
The company was fined $41 million by the Commodities Futures Trading Commission and separately two years ago by the New York Attorney General. Critics say Tether has far to go before its reserves are regarded as transparent and confirmed.
Tether's bet on Bitcoin aims to capitalize on the digital asset's potential growth, and it's not the only company to do so. MicroStrategy, a software firm, has also bought Bitcoin as an investment. At the end of the first quarter, MicroStrategy's Bitcoin stash surged to 140,000, valued at $4.2 billion.
Tether's new strategy could also underpin the price of Bitcoin at the end of the year, with analysts at Standard Chartered Bank saying the cryptocurrency could reach $100K by the end of 2024, CNBC reported. The collapse of SVB and mid-tier lenders have improved the outlook for BTC as a 'trustless asset', while profits at crypto miners and the end of the Fed's tightening cycle would also help, said analyst Geoff Kendrick.