Key Points:
- Tether investment plans expanded with over $1 billion in financial infrastructure, AI, and biotech in emerging markets within a year.
- The company earned $4.5 billion in Q1 by investing in US Treasury bills, benefiting from high interest rates.
According to Bloomberg, Tether Holdings Ltd., the issuer of the world’s largest stablecoin, USDT, plans to invest more than $1 billion in the next 12 months.
Tether Investment Plan Announced With $1B
CEO Paolo Ardoino revealed the Tether investment plan, highlighting its focus on alternative financial infrastructure, artificial intelligence, and biotechnology in emerging markets.
In a recent interview, Ardoino detailed that Tether Investments, which has a growing team of 15 employees, evaluates up to hundreds of projects monthly, primarily sourced from start-ups. Over the past two years, Tether has invested approximately $2 billion in these high-potential sectors.
Despite these significant Tether investment plans, the company remains committed to maintaining 100% of its reserves while also setting aside an additional 6% buffer from profits to ensure smooth USDT redemptions. Its recent investments include over $1 billion in artificial intelligence, such as backing the data center operator Northern Data Group.
Tether investment plan underscores the company’s growing financial influence, driven by the profitability of its USDT stablecoin, which tracks the US dollar with a market capitalization of about $112.4 billion. Tether has significantly benefited from the high interest-rate environment, earning substantial profits by investing most of its reserves in US Treasury bills and other securities. In the first quarter, Tether reported a profit of $4.5 billion, as confirmed by its published attestation.
Regulatory Scrutiny and Stability of USDT
However, the quality of assets backing stablecoins like USDT has faced intense regulatory scrutiny. Concerns have been raised about the liquidity of reserves and their ability to withstand mass redemption requests during market pressures. In 2021, Tether settled with the New York Attorney General and the Commodity Futures Trading Commission over allegations of misrepresenting its reserves and concealing losses, though it admitted no wrongdoing.
Despite these challenges, USDT has maintained its one-to-one peg to the dollar without significant deviations. Ardoino noted that the current interest-rate environment had bolstered Tether’s profitability, positioning the company for continued growth and investment in emerging markets.
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