Stablecoin giant Tether Holdings recently made headlines when it withdrew more than $4.5 billion from banks during Q1 2023, leading to a significant reduction in counterparty risk. According to the company’s latest attestation by BDO Italia, Tether’s market capitalization experienced a substantial increase, growing from $66 billion to over $82 billion during this period. This impressive growth accompanied a strategic move by Tether, which reduced bank deposits by a staggering 90%, leaving only $481 million.
These remaining bank deposits are distributed among multiple banks, most likely in response to recent bank failures that affected some of Tether’s competitors. This strategic move enabled the stablecoin operator to increase its holdings in United States Treasury bills, reaching a new high of more than $53 billion or 64% of its total reserves.
As a result, the company’s USDT token now boasts an 85% backing through cash, cash equivalents, and short-term deposits that can quickly be liquidated to handle redemptions. This total also includes over $7.5 billion in repo facilities.
Tether’s financial success over the past quarter appears to be driven by high yield rates, pushing revenues up and increasing surplus reserves. This effectively leads to overcollateralizing the USDT and providing stability that rivals top-tier companies. In fact, Tether reported that its financial attainment in the quarter surpassed the profits of well-known corporations such as Blackrock, Netflix, Starbucks, Cash App, and PayPal.
In a commendable pursuit of transparency, Tether revealed its holdings of gold and Bitcoin (BTC) for the first time in this attestation. The company has also made great strides in improving its financial indicators, announcing its plans to decrease commercial paper in its reserves from $20 billion to $8.4 billion by June 2023 and entirely eliminate it by year’s end.
Some critics may question Tether’s recent moves, but the company’s CTO, Paolo Ardoino, has not shied away from addressing concerns via Twitter. This exchange of ideas and information demonstrates the company’s commitment to keeping the crypto community informed of Tether’s developments and ongoing efforts to ensure financial stability and transparency.
In conclusion, Tether’s strategic decisions have positioned the company strongly within the market, with growth indicators well beyond other major corporations. Through responsible management of its reserves and improved transparency, Tether reinforces the importance and potential of stablecoins within the broader crypto space.
Source: Cointelegraph
