Tether Holdings Ltd is the company behind the largest stablecoin. The reserve that backs the world’s most traded digital asset saw more than $700M in “net profit” added in the fourth quarter.
Tether Holdings hasn’t previously quantified its financial results; neither did it specify how it accomplished net profit. BDO Italia’s Feb. 9 attestation did not include the number of its reserves. A one-time snapshot of the company’s records does not allow third-party attestations or full-on access. Hence, it is completely different from financial audits.
Stablecoins are digital tokens that maintain a one-to-one value in comparison to a less volatile currency like the dollar. They achieve this through storing substantial reserves as segregated collateral. The latest attestation examined Tether’s reserves as of Dec. 31 last year. They held about 82% of the $67B in assets backing its USDT in cash and its equivalents.
Tether’s reserves have been becoming more and more liquid
TerraUSD, which depended on algorithmic incentives with its sibling token LUNA to stay afloat, suffered a $40B demise in 2022. So it is no surprise that the assets and methods used to support stablecoins, like Tether’s USDT were under subtle examination. Others, such as Circle Internet Financial Ltd, have moved to issue reserve attestations monthly in response to regulators’ demands for more openness from the issuers.
Tether’s reserve was held in short-dated US Treasury notes. Eventually, they have grown in popularity as stablecoin operators’ reserves as interest rates rose in 2022. In the previous quarter, this number had hardly budged. At this point, Tether will likely receive approximately $1.8B in profits from such holdings if the current pace of 4.67% sticks on.
Its cash and bank deposits decreased by 12% to $5.3B. In the meantime, its holdings in money-market funds increased 3.8% quarter on quarter to $7.4B. In tandem with USDT’s circulation, its total reserves fell by 1.6%.
