Tether Holdings Limited, issuer of the USDT stablecoin, reported a Q2 profit of $850 million, bringing its total excess reserves to $3.3 billion.
“The $850 million represents the retained profits of this quarter which have contributed to increasing Tether’s excess of reserves”, a spokesperson for Tether told Decrypt. “It’s basically additional capital sitting in the company to further strengthen Tether.”
Between April and June 2023, Tether's operational profits soared past the $1 billion mark, marking a 30% increase quarter over quarter, according to the report. The attestation was prepared by Binder Dijker Otter (BDO), a Belgium-based accounting firm.
Tether's USDT is the world's largest stablecoin by market cap. As of this writing, it has a market cap of $84 billion, according to CoinGecko. Stablecoins are digital assets that are pegged 1:1 to fiat currencies, in this case the U.S. dollar. Since stablecoins are meant to be redeemable for the fiat they're pegged to, issuers maintain reserves.
Tether has published a total of 14 reports on its reserves since 2017. For a while in 2021, the company took some criticism for having a substantial amount of its cash in commercial paper—a type of unsecured and short-term corporate debt. At the time, Chinese property developer Evergrande had rattled markets because it looked likely that the company would miss payments worth hundreds of billions on its debts. But in October 2022, Tether announced that it had entirely removed commercial paper from its reserves.
In its report on Monday, Tether said its reserves remain highly liquid, with a whopping 85% of its investments held in cash and cash equivalents.
The report also showcases, for the first time, Tether’s indirect exposure (via money market funds) to U.S. Treasury Bills as well as the Treasuries collateralizing the Overnight Repo, a form of short-term borrowing for dealers in government securities.
By aggregating them together, the amount of Treasuries backing USDT is about $72.5 billion.
Furthermore, the company disclosed a share buyback of $115 million and investments in energy-related initiatives, which do not comprise part of Tether's stablecoin reserves.
“During this quarter Tether launched a share repurchase initiative for a maximum of 10% of the existing shares to give the opportunity to those shareholders wishing to sell their shares”, Tether’s spokesperson told Decrypt. “Only a marginal number of the shares were bought back, demonstrating Tether's shareholder commitment to the Business. The repurchase of these shares was financed with the profit of this quarter. The terms and conditions of the Buyback remain private.”
The report also indicates that Tether's consolidated total assets amount to at least $87 billion, while its consolidated total liabilities amount to $83 billion, of which $83 billion relates to digital tokens issued.
“I am immensely proud of our most recent reserves attestation, reaffirming our unwavering commitment to transparency,” said Paolo Ardoino, CTO of Tether, in a Press Release. “Transparency is not just a buzzword for us; it is the cornerstone of our philosophy. We believe that open communication and strong financials foster trust and reliability, and this is what the global community deserves especially in a year devastated by many failures across the banking and crypto industry”.