Tether buys Bitcoin to bolster its reserves

Tether buys Bitcoin to bolster its reserves

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Tether (USDT) is the world’s largest stablecoin by capitalization. Currently, the Tether network has a capitalization of more than 76 billion euros! This makes Tether the third largest coin in the world after Bitcoin and Ethereum. The stablecoin Tether has just announced that it will regularly buy bitcoins. For What ?

Stablecoins under pressure

Since last year constables have been in the eye of the storm. Indeed, the collapse of Terra’s ecosystem and its stablecoin has exposed several flaws. In particular, there are stablecoins criticized for not being aligned enough. What does that mean?

As a reminder, s dog stable It is a crypto that has a stable price. It is the price of a stablecoin backed by fiat currency with a 1:1 ratio. For example, the stablecoin Tether is backed by the US dollar. Therefore its course is always worth (about) a dollar. Stables are coins that are widely used in trading because they allow you to receive funds. Since their price is stable, they are protected against the volatility that affects classic cryptocurrencies. But for the price of a stablecoin to remain stable, the company still needs to be behind it sufficient capital. This is where the shoe squeezes for regulators…

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Why Tether announced to buy bitcoins?

Tether is closely followed by US regulators who question its level of equity. In February 2021, for example, the New York Attorney General’s Office imposed a fine to the stablecoin as well as theobligation to submit quarterly accounting reports. But Tether defended itself fiercely on this point.

In her first quarter report, 2023Tether has announced that it is reserves in BTC equivalent to $1.5 billion. But Tether plans to go further and continue its investment in Bitcoin to further reassure investors. In its press release, the stablecoin therefore announced that it wanted Dedicate 15% of their net profits to the purchase of bitcoins. Tether also announced that it will keep the private keys of the bitcoins in question, indicating that it will maintain full control over these reserves.

“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is based on its strength and potential as an investment asset (…) Bitcoin has continuously proven its resilience and is is a long-term store of value with significant growth potential. (…) Our investment in Bitcoin is not only a way to improve the performance of our portfolio, but also a way to align us with a transformative technology that has the potential to reshape the way we do business and spend we are our lives. Paolo Ardoino, CTO of Tether.

Source: Tether press release

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