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Tether says it has around $1.6 billion in excess reserves to back its USDT stablecoin

Tether says it has around $1.6 billion in excess reserves to back its USDT stablecoin

Cryptocurrency company Tether expects to make a $700 million profit in the March quarter, bringing its total reserves to more than $1 billion, the company’s chief technology officer told CNBC, revealing the latest figures for the first time.

Tether issues the stablecoin USDT
which is pegged one-to-one to the US dollar. USDT is backed by real-world assets such as fiat currencies and US Treasuries so it can always be exchanged for US dollars.

Stablecoins are used by traders to enter and exit different cryptocurrencies without the need to convert money back into fiat currency.

Over the years, stablecoin issuers have been criticized for not being transparent enough with the types of assets they hold in reserve to back their digital currencies. Tether holds securities, or short-term unsecured debt issued by companies. But Tether does not disclose the type of company or the geographic location of the company that is the source of the debt.

Tether eventually sold all of its commercial holdings and switched to US Treasuries, which are considered a more stable and reliable asset. The company produces so-called attestations, which are reports created by auditors to prove the company’s reserves and the assets it holds.

The last report released by Tether covering the December quarter showed that the company had more assets than liabilities.

Tether then revealed in February that it made a profit of $700 million in the December quarter. The company’s total assets after deducting liabilities amounted to $960.6 million.

Paolo Ardoino, Tether’s chief technology officer, said that the company expects that excess reserves will increase by $700 million in the current quarter, which has not yet ended. That would bring Tether’s excess reserves to $1.66 billion. And this would be the first time Tether has crossed the $1 billion mark.

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