Tether Boosts Its Bitcoin Portfolio by $380 Million in Q4 2023

Tether, the largest issuer of stablecoins in the crypto market, has increased its Bitcoin holdings by 8,888 BTC in the last quarter of 2023. This purchase, which cost about $380 million, brings Tether’s total Bitcoin reserves to over $2.8 billion.

Tether’s Bitcoin Strategy

Tether, which is best known for its USDT stablecoin, has been investing in Bitcoin as part of its reserve diversification strategy. According to a company release in May 2023, Tether committed to allocate 15% of its realized profits from investments to buy Bitcoin and add it to its reserve basket.

The company stated that it held $1.5 billion in BTC reserves as of its Q1 2023 attestation report. The latest purchase of 8,888 BTC, which took place on December 31, 2023, according to BitInfoCharts data, increased Tether’s Bitcoin holdings to 66,465.20 BTC. This makes Tether the 11th largest Bitcoin holder, according to Dune Analytics data.

Tether’s CEO Paolo Ardoino explained the rationale behind the company’s Bitcoin strategy, saying that Bitcoin has proven its resilience, long-term value proposition, and widespread adoption, making it a compelling choice for Tether’s reserve surplus. Tether also custodies its Bitcoin reserves in-house, following the Web3 principle of “not your keys, not your coins”.

Tether’s Stablecoin Dominance

Tether’s USDT stablecoin is the most popular and widely used stablecoin in the crypto market, with a market capitalization of over $72 billion, according to CoinMarketCap data. USDT is pegged to the US dollar and backed by a basket of assets, including US government bonds, gold, and other cash-like assets, as per Tether’s latest attestation report.

USDT is used as a medium of exchange, a store of value, and a hedge against volatility in the crypto market. It is also widely adopted by traders, investors, and institutions across various platforms, such as exchanges, wallets, DeFi protocols, and payment services. USDT has a daily trading volume of over $100 billion, surpassing that of Bitcoin and other major cryptocurrencies.

Tether’s Regulatory Challenges

Despite its success and popularity, Tether has faced scrutiny and criticism from regulators and authorities over its transparency, compliance, and backing of its stablecoins. In February 2021, Tether settled a lawsuit with the New York Attorney General’s office, which accused Tether of issuing USDT without sufficient reserves and misleading the public about its backing. Tether agreed to pay $18.5 million in fines and submit periodic reports on its reserves.

In January 2024, a United Nations report claimed that Tether’s USDT stablecoin on the Tron blockchain was used by cybercriminals to move illicit funds, mainly in Asia and Southeast Asia. Tether responded to the report, saying that it was disappointed with the negative portrayal by the UN and that it overlooked the positive role of USDT in fostering financial inclusion and innovation in the crypto space.

Tether also stated that it has implemented robust anti-money laundering (AML) and counter-terrorism financing (CTF) policies and procedures, and that it cooperates with law enforcement agencies and regulators to combat illicit activities involving its stablecoins.