Tether Reports $1.48B Profit in Q1, Reveals Bitcoin, Gold Reserves

Stablecoin issuer Tether reported $1.48 billion in net profit for the first quarter of the year, double the previous quarter’s result, according to its latest attestation published Wednesday.

The company for the first time broke out bitcoin (BTC) and gold holdings detail in its consolidated reserves report. As of March 31, Tether held $1.5 billion of bitcoin on its balance sheet – or about 2% of roughly $80 billion in reserves – and $3.4 billion of gold, or about 4% of reserves.

This quarter’s attestation comes after a turbulent period for the $131 billion stablecoin market, when several tokens lost their dollar pegs in a knock-on effect as the U.S. banking crisis hit Circle’s USDC, the second largest dollar-pegged stablecoin. The New York Department of Financial Services also forced fintech firm Paxos to stop issuing the third-largest stablecoin, Binance USD (BUSD), in February, while the U.S. Securities and Exchange Commission (SEC) was reportedly probing the firm for issuing BUSD as unregistered security.

Tether’s dollar-pegged USDT, the largest stablecoin with an $81.8 billion supply as of May 9, has been one of the clear winners of the calamity, increasing its market capitalization by $16 billion since the start of the year, or 24% growth. Tether also issues stablecoins pegged to other currencies and gold, which represent a fraction of USDT’s market cap.

Read more: USDC Outflows Surpass $10B as Tether’s Stablecoin Dominance Reaches 22-Month High

“Tether has become the most trusted stablecoin in the industry due to its perceived safety from the SEC and due to its peg safety as of late,” Conor Ryder, an analyst at digital asset research firm Kaiko, wrote in a note.

According to the Q1 attestation signed by financial services firm BDO Italia, Tether held about $2.44 billion in excess reserves of the $79.4 billion Tether-issued tokens in circulation as of March 31. That surplus was at an all-time high, Paolo Ardoino, chief technology officer of Tether, said in the announcement.

All newly issued tokens were invested in US Treasury bills or deposited in overnight repurchase and reverse repurchase facilities, Tether said. The firm held about 85% of all reserve assets in cash and cash-like assets, U.S. Treasury bills and bank deposits among them.

Tether continued to trim the amount of secured loans in its reserves, reducing them by about $500 million to $5.3 billion in Q1. The firm promised in December to completely exit from these holdings this year.

Tether has been criticized in the crypto industry for years for a lack of transparency about its reserve assets and controversial maneuvers. Last year, a U.S. judge ordered the firm to produce documents about USDT’s backing as part of a lawsuit that alleged Tether conspired to inflate BTC’s price with newly issued stablecoins.

“We have an extremely positive outlook and remain committed to transparency, which is why we have introduced new categories in the reserves’ breakdown in our quarterly report to provide even greater transparency to our users," Ardoino said in the statement.