The issuer of stablecoins, Tether, recently revealed impressive financial results, with a net profit of $2.5 billion in the third quarter. This performance brings its annual profits to $7.7 billion, showcasing the strength of its business model based on managing reserves in tangible assets. The company’s flagship stablecoin, USDT, is approaching a market capitalization of $120 billion, solidifying its position in the crypto ecosystem.
Tether Unveils Record Profits for Q3 2024
According to Tether CEO Paolo Ardoino, these results are largely due to returns generated by US Treasury bonds and unrealized gains on the company’s gold reserves, as the precious metal saw a 15% increase during the quarter. Revenues from these assets amounted to $1.3 billion for Treasury bonds and $1.1 billion for gold, highlighting Tether’s investment strategy to secure and enhance reserve funds.
Reserves Exceed Obligations and Coverage Ratio Increases
Tether has also published an attestation for this third quarter, signed by accounting firm BDO Italy, confirming the robustness of its reserves. As of September 30, 2024, the company’s reserve assets amounted to $125.5 billion, covering $119.4 billion of liabilities. With an excess of over $6 billion, Tether continues to build a strong cash cushion.
The composition of the reserves reveals that $105 billion is held in cash or cash equivalents, including $84.5 billion held in US Treasury bonds. Gold and Bitcoin assets account for $5 billion and $4.8 billion respectively, providing some diversification to the reserve funds. Furthermore, Tether’s direct and indirect exposure to Treasury bonds, including placements in money market funds and reverse repurchase agreements, exceeds $102 billion, demonstrating a prudent and liquidity-focused management policy.
Tether Investments: Diversification and Expansion into Emerging Sectors
Tether’s newly launched investment arm, Tether Investments, continues to expand its activities in the energy, crypto mining, and artificial intelligence sectors, with a net worth increase to $7.7 billion, up from $6.2 billion in the previous quarter. This growing portfolio now includes 7,100 bitcoins valued at approximately $500 million.
Tether is also set to introduce two new products during the month of November, although no further details have been disclosed at this time.
USDT: The Key Asset and Target of Attacks
Tether’s USDT plays a central role in the digital asset market, ranking as the third-largest asset in terms of market capitalization. It serves as the main source of liquidity on exchange platforms and is gaining popularity as a means of payment in emerging economies. This strategic position makes Tether an essential player for transactions and value transfers within the crypto ecosystem.
Despite these remarkable results, Tether is facing increasing regulatory pressures. A recent article in the Wall Street Journal reported that the company is under investigation by US authorities for possible violations of sanctions and anti-money laundering laws. CEO Paolo Ardoino categorically denied these allegations, emphasizing Tether’s compliance with US sanctions and highlighting its prominent role in acquiring US debt.
