Tether Reports Q1 2023 Profit of $1.5 Billion

In its second quarterly earnings report, Tether, the issuer of the largest stablecoin in the crypto market, has announced a profit of $1.5 billion, doubling its previous earnings.

According to the Q1 2023 report, Tether, the company behind the USDT stablecoin, recorded a profit of $1.48 billion in the first three months of 2023. This figure is double the $700 million profit reported for Q4 2022 and also surpasses previous forecasts.

Additionally, Tether's reserve surplus has reached $2.44 billion, nearly triple the $960 million from the end of 2022. As of January 31, 2023, Tether reported holding $81.8 billion in assets to back its $79.3 billion in issued stablecoins.

As of March 31, 2023, Tether's assets include $53 billion in U.S. Treasury bonds and $15.7 billion in repo agreements, with cash holdings amounting to only $481 million. Notably, this is the first time the company has disclosed its Bitcoin and precious metals holdings, totaling $1.5 billion and $3.3 billion, respectively.

The company has reduced its loan exposure from 8.7% of total reserves to 6.5%, with plans to eliminate this figure entirely, as previously promised.

All assets backing the USDT issued in Q1 2023 were invested in U.S. Treasury bonds or repo agreements rather than held as cash to mitigate liquidity risk.

In an interview with Coin68 in April, Tether's Chief Technology Officer Paolo Ardoino stated that holding U.S. Treasury bonds is safer than holding cash, especially following the collapse of several U.S. banks in March, which led to Circle being stranded with $3.3 billion in collateral for its USDC stablecoin.

Ardoino commented on Tether's latest earnings report:

“We will continue to monitor the risk-adjusted returns of our asset portfolio and make necessary adjustments based on economic conditions and market cycles. This is part of our risk management process.”

As of the writing of this article, USDT’s market capitalization stands at over $82.5 billion, dominating its closest competitors, USDC ($30 billion) and BUSD ($5.7 billion).

The leading stablecoins in the crypto market as of 10:00 PM on May 10, 2023, according to CoinMarketCap, show USDT's market cap stability and dominance.

USDT’s market cap has been consistently strong throughout 2023, while USDC is still struggling to regain community trust after the depeg incident due to the U.S. banking crisis in March. BUSD has also faced a severe downturn following regulatory actions from New York and the SEC, requiring Paxos to halt new issuances and begin the redemption process by February 2024.