Tether, a stablecoin provider, said that it will buy Bitcoin using 15% of its net realized operational earnings.
Tether described its investment strategy in a statement issued on May 17, highlighting its emphasis on using realized gains.
To ensure that only actual profits from its activities would be taken into account, the corporation made it clear that any unrealized capital gains coming from price rises would be discarded.
As of the end of March 2023, the corporation had almost $1.5 billion in BTC in its reserves. Tether, in contrast to institutional investors, adopts a different strategy and holds onto the private keys linked to its Bitcoin holdings.
Tether stated that among its smaller investments, it focuses on the development of communication, electricity, and bitcoin mining infrastructure.
The stablecoin (USDT) issued by Tether is remarkable for holding the position of being the third-largest digital asset globally, after bitcoin (BTC) and ether (ETH), despite persistent scrutiny regarding the transparency of its reserves.
The second-largest stablecoin, USDC from Circle, was affected by the U.S. regional banking crisis in March, but the company’s main token, USDT, emerged as a haven. Several stablecoins momentarily lost their dollar peg as a result of the abrupt collapse of Silicon Valley Bank (SVB), which caused a portion of USDC’s currency holdings to get locked at the bank throughout the weekend.
Due to its apparent detachment from banks with headquarters in the United States and its incorporation in the British Virgin Islands and Hong Kong, Tether emerged from the crisis as a clear winner by retaining its pricing stability. This year, USDT circulation increased by 24% while the majority of its competitors had considerable outflows.
Other companies than Tether have taken this approach. MicroStrategy, the business software company well-known for its fondness for cryptocurrencies, continues to be a steadfast backer of Bitcoin after selling some of its assets for tax purposes in December.