If you ask Paolo Ardoino, Tether (USDT) is perhaps the safest asset on earth right now during the banking crisis. In the first quarter of 2023, the company expects to record a profit of $700 million, which is comparable to the profit of the last quarter of 2022.
Reserves of $1.5 billion
That profit would mean that Tether has a reserve pool of $1.5 to $1.7 billion on the shelf. “That means our equity grows to $1.5 to $1.7 billion, which is in addition to the reserves that cover our stablecoins for 100 percent,” thus Paolo Ardoino to Cointelegraph.
According to him, this would make Tether one of the safest assets on earth at the moment. Which of course refers to the banking crisis that is currently going on in the United States. It seems that the harsh criticism Tether received in recent years has paid off.
You can call it a bit of luck, but due to the high interest rates, Tether is currently making huge amounts of money on the billions of dollars in assets that the company manages. Furthermore, Ardoino indicates that he is a huge Bitcoin enthusiast, which he believes is also the hedge of Tether.
Tether’s hedge
It’s unclear what exactly Ardoino means by “the hedge of Tether,” but it appears the company also owns some Bitcoin. “I like Bitcoin and that’s our hedge, that’s why we’re in Bitcoin, because we don’t trust those guys who took so much risk with our deposits,” said Tether’s chief technology officer.
At the end of 2022, Tether managed to reduce its commercial debt exposure to zero on its own. Commercial debt is corporate bonds, which generally carry greater risk than U.S. Treasury bonds.
Tether kept those debt securities, because of course a higher interest can be earned on them. Now they opt for safety and that choice is not bad at all at the moment. Interest rates have risen considerably as a result of inflation, which means that they now make billions in profits on their holdings on an annual basis.
This news comes at a time when Tether’s market cap continues to rise. At the time of writing, USDT’s market cap is touching $78.5 billion, which is the highest level since May 2022. So Tether is also clearly benefiting from all the turmoil that is currently going on.