Tether Predicts $700 Million Profit in Q1 2023, Crossing the $1 Billion Mark in Excess Reserves

Tether, the cryptocurrency firm behind the USDT stablecoin, has estimated that it will earn $700 million in profit for Q1 2023, surpassing the $1 billion mark in excess reserves for the first time.

Paolo Ardoino, Tether’s chief technology officer, revealed the figures in an interview with CNBC, adding that the company plans to use the excess reserves to further capitalize its stablecoin.

Tether’s USDT stablecoin is pegged one-to-one with the U.S. dollar and is backed by real-world assets, including fiat currency and U.S. Treasurys, Investors King reports.

The stablecoin is used by traders to move in and out of different cryptocurrencies without the need to convert money back into fiat currencies.

In recent years, stablecoin issuers have faced criticism for not being transparent enough about the assets they hold in reserve to back their digital currency. Tether initially held commercial paper, or short-term, unsecured debt issued by companies, but later moved into U.S. Treasurys, which are considered a more stable and reliable asset.

The company produces attestations, reports produced by an auditor, to attest to the company’s reserves and the assets it holds.

Tether makes money from various fees, investments in digital tokens and precious metals, and issuing loans to other institutions. The value of all the USDT in circulation has grown substantially this month, thanks in part to the collapse of Silicon Valley Bank, which has boosted investor confidence in Tether.

Despite Tether’s success, the company has faced ongoing scrutiny over its reserves and financial stability. Ardoino defended the company’s record, questioning why people are still questioning its reserves, even after traditional lenders like Credit Suisse have collapsed. He argued that Tether is making money while banks are failing, making it a safer option for investors.