Tether, the world’s largest stablecoin issuer, announced on Wednesday that it would buy Bitcoin monthly with 15% of its net profit. The company will acquire the leading crypto asset in the market in its newly initiated investment strategy to strengthen its USDT reserve portfolio.
According to the announcement in a blog post, Tether will start implementing its investment strategy in May, joining the likes of MicroStrategy in holding BTC in its reserves. The stablecoin issuer sees the periodical Bitcoin purchase as a way to diversify its reserve, which is largely cash-dominated.
“Starting this month, Tether will regularly allocate up to 15% of its net realized operating profits towards purchasing Bitcoin. These Bitcoin shall be considered on top of the minimum reserves assets that 100% back tether tokens,” Tether tweeted.
The Bitcoin Love Continues
The leading stablecoin coin issuer noted that Bitcoin has shown it is an investable asset with its track record of good returns since its debut. Tether also stated that the massive adoption of Bitcoin by institutional investors shows the untapped potential of the cryptocurrency.
Tether already has a Bitcoin bag, as its quarterly financial report shows it holds approximately $1.5 billion in reserve. Its new strategy shift aimed at strengthening, increasing, and diversifying the company’s reserve would mean it would buy roughly $222 million worth of Bitcoin monthly.
The stablecoin issuer, however, expects that its Bitcoin holdings, both presently and in the future, will not exceed its Shareholder Capital Cushion. The capital cushion provides stability and prevents shareholder capital losses in cases of heavy business capitulation.
Bitcoin is Resilient: Tether CTO
Reacting to the announcement, the Chief Technology Officer of Tether, Paolo Ardoino, stated that the strength and potential of Bitcoin as an investment justified its adoption as part of Tether’s reserves.
According to Ardoino, Bitcoin has shown it is a long-term store of value and has proven to have substantial growth potential. Furthermore, the asset’s decentralized and scarce structure also influenced the adoption of Bitcoin, not only by Tether but by other institutional and retail investors.
