Tether to buy Bitcoin based on monthly net profits

Tether, the issuer behind the largest stablecoin USDT, is following in the footsteps of Microstrategy in order to manage its reserves. The stablecoin issuer plans to strengthen its reserves with the help of Bitcoin and move away from United States-based government debts. 

In an announcement on May 17, Tether revealed that they plan to invest a portion of their profits into Bitcoin on a monthly basis. The firm said it will “regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin (BTC).”

The announcement about Tether’s BTC purchase comes within a week of the company’s quarterly financial report, where the stablecoin issuer reported $1.5 billion in net profits. 

According to a statement from the company, Tether will keep all of its Bitcoins in self-custody. As of the first quarter’s end, it has $1.5 billion in Bitcoin on hand, making up around 2% of its total reserves. 85% of the holdings were in cash, cash equivalents, and other short-term deposits, primarily Treasury bills.

Tether claimed BTC was an obvious choice since the original cryptocurrency has proven itself to be a long-term store of value assets. The stablecoin issuer cited Bitcoin’s mammoth price rise over the past decade and its resilience against traditional financial failures for the decision.

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Paolo Ardoino, CTO of Tether, in a statement, said that the world’s first and largest cryptocurrency is underpinned by its potential as an investment asset. He added that Bitcoin’s limited supply, decentralized nature and widespread adoption have positioned it as a “favored choice among institutional and retail investors alike.”

MicroStrategy has a similar Bitcoin investment plan where they have actively replaced the U.S. dollar in their reserve with Bitcoin. Although Microstrategy doesn’t have a fixed time frame for its BTC investment, Tether plans to do it by the end of every month.

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