BTC, Gold Boost Tether Profits to Historic $4.52 Billion for Q1 2024

Tether Holdings, the firm behind the largest stablecoin USDT has just announced it has made a record US$4.52 billion (AU$ 6.92 billion) in profits for the first quarter of 2024.

The entities responsible for issuing stablecoins and managing reserves contributed significantly, with about US$1 billion (AU$1.5 billion) of the profit coming from net operating profits, mainly from US Treasury holdings. Additional profits from mark-to-market gains were in Bitcoin and gold, a report said.

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The report by auditing firm BDO revealed that the group’s ownership of US Treasuries now surpasses US$90 billion (AU$137.88 billion), reflecting significant growth.

Newly revealed net equity stands at US$11.37 billion (AU$17.41 billion), up from US$7.01 billion (AU$10.73 billion) at the end of 2023, with excess reserves to support stablecoin operations increased to nearly US$6.3 billion (AU$9.65 billion).

Additionally, US$12.5 billion (AU$19.15 billion) in USDT was issued in the quarter.

Third-Party Attestations Not Financial Audits

Tether has often been questioned over its reserves and the lack of a proper audit. Regulators have increasingly scrutinised the asset quality backing stablecoins such as USDT, focusing on the liquidity of the reserves and their ability to handle large-scale redemptions under market stress. Regarding this, Tether stated:

In regard to the Reserves backing fiat-denominated stablecoins, BDO further confirmed that Tether-issued tokens are backed by Cash and Cash Equivalents at an impressive 90%, underscoring its commitment to upholding liquidity within the stablecoin ecosystem.

Tether

The total assets backing the tokens amount to approximately US$110 billion (AU$168 billion), surpassing liabilities by over US$6.26 billion (AU$9.69 billion).

However, third-party attestations differ from financial audits because they provide only a momentary snapshot and do not permit comprehensive access to a company’s financial records.

As part of a settlement with US authorities over allegations of concealing fund losses and misrepresenting reserves, Tether agreed in February 2021 to publish quarterly reserve reports.

BlackRock Investment and Sanction Doubts

Recently, Tether announced a US$200 million (AU$306 million) investment in Blackrock Neurotech, a brain-computer interface technology company, and disclosed that its investment portfolio totals US$5.1 billion (AU$7.8 billion).

Additionally, regulators such as Senators Elizabeth Warren and Roger Marshall have increased pressure on stablecoin issuers over concerns regarding the use of their tokens in evasion of sanctions.

In late April Tether said it will collaborate with the US government to freeze wallet addresses linked to sanctioned entities like Venezuela’s PDVSA, which plans to use the USDT stablecoin to circumvent US sanctions.

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This followed a Reuters report detailing PDVSA’s adjustments to oil contracts requiring payment in USDT to evade sanctions and maintain oil exports despite new US licensing requirements.