Tether Projected to Earn $700 Million in Q1 2023
Tether, the issuer of the largest stablecoin USDT, is expected to report a profit of $700 million for Q1 2023, driven by the decline of other stablecoins in the market.
Tether has teamed up with the world’s fifth-largest auditing firm to provide proof of reserves for USDT. Paolo Ardoino, Tether’s CTO, revealed to CNBC that the company estimates a net profit of $700 million for the first quarter of 2023, bringing its surplus assets to over $1 billion.
According to CoinMarketCap, the circulating supply of USDT has surged from $70.98 billion to $78.14 billion since the beginning of March, meaning Tether has issued around $8 billion in less than a month. Recently, $5 billion worth of USDT was issued within the past week, as reported by Coin68.
Tether’s issuance of a significant amount of USDT coincided with the turmoil of its competitor, USDC from Circle, which faced a crisis of confidence from investors. USDC saw a severe depeg, dropping to as low as $0.87, alongside other stablecoins like BUSD, DAI, and FRAX, amid a wave of financial sector FUD.
At this time, USDT remains the only reliable stablecoin holding its peg at $1, becoming a “safe haven” for most investors. The increased demand for USDT has fueled Tether’s growth during this period, according to Ardoino.
When asked about a hypothetical scenario where Tether faces a crisis similar to Circle’s, Ardoino responded:
“Why do people always question reserves right after traditional banks collapse? Tether is continuously evolving while banks are collapsing. So, if you need to store your money somewhere, I’d say Tether is the safest among all options.”
Earlier, in October, Tether decided to completely eliminate commercial paper from its reserves backing USDT and increased its holdings in U.S. Treasury bills. The company’s other assets include corporate bonds, money market funds, and precious metals.
According to the auditing firm BDO in its Q4 2022 financial report, Tether’s reserves remain highly liquid, with most investments held in cash. In this quarter, the stablecoin issuer reported a net profit of $700 million; however, this profit was effectively “part of the equity” and was injected as additional capital to enhance the company’s stability.
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