Tether Posts $1.3 Billion Profit as Interest From Treasuries Offsets Bitcoin Decline

The market value of Tether’s USDT token has climbed to above $114 billion, as the demand for the stablecoin rose during this year’s crypto rally.

Tether Holdings Ltd., the company behind the largest stablecoin, said it posted a net operating profit of $1.3 billion in the second quarter.

The market value of Tether’s USDT token has climbed to over $114 billion this year, as demand for the stablecoin rose during the crypto rally. The British Virgin Islands-incorporated company didn’t disclose how net operating profit is derived in the statement it released Wednesday.

“We keep increasing in market cap and then we keep increasing in our exposure to US Treasury bills,” Paolo Ardoino, chief executive of Tether, said in an interview on Wednesday. “I believe that is unprecedented for any private company — we are comparing ourselves to countries.”

Stablecoins are a type of cryptocurrency that typically aim to keep a one-to-one value with fiat currencies such as the dollar. They are usually backed by cash and cash equivalents. Tether said it increased its direct and indirect ownership of Treasuries in the quarter, which the firm says now exceeds $97.6 billion. Most of the reserve backing its stablecoins are deposited in Treasuries, from which Tether earns profits on the interest paid.

Tether discloses its quarterly results in attestations by BDO. Third-party attestations are not the same as financial audits, as they are limited to a snapshot in time and do not allow full access to a company’s books. The quality of assets backing stablecoins like Tether’s USDT have come under intense scrutiny in recent years, as regulators grew concerned about the liquidity of operators’ reserves and if they could withstand mass redemption requests while under market pressure.

“The audit is still in our minds and a top priority,” Ardoino said. “I’ve spoken at length about the complexities of stablecoins to get an audit. Because if you are one of Big Four auditing companies and you have, I would say like, 50,000 banks that are using your auditing services, and on the other side you have one stablecoin, no matter how much that stablecoin can pay you, the other 50,000 customers will be very, very upset.”