Tether has reported a staggering $2.85 billion profit

Tether has reported a staggering $2.85 billion profit, marking a new record for the stablecoin issuer, as its flagship token USDT approaches a $100 billion market cap milestone.

The company’s latest quarterly attestation, released on Wednesday, revealed that over $1 billion of the profit stemmed from interest earned on its substantial U.S. Treasury, reverse repo, and money market fund investments, all of which serve as collateral for the USDT stablecoin. Additionally, Tether’s other investments, including bitcoin (BTC) and gold, contributed significantly to the remaining profits.

Throughout the past year, Tether has amassed $6.2 billion in net operating profits, with the bulk of it, around $4 billion, attributed to interest earned on Treasury holdings. The company’s profits have been buoyed by the Federal Reserve’s efforts to combat inflation, which have led to increased payouts from fixed-income investments.

The latest quarterly attestation, verified by BDO Italy, revealed that Tether holds $97 billion in assets to cover $91.6 billion in liabilities as of December 31, resulting in $5.4 billion in excess reserves supporting its stablecoins.

Tether’s USDT, the most widely used stablecoin in the crypto market, has surged to an all-time high market capitalization of $96 billion, with an increase of over $10 billion since late October amidst a resurgence in digital asset trading. The company’s profitability is further boosted by the current 22-year high in U.S. interest rates, as it retains the yield earned on reserves rather than passing it on to USDT holders.

In addition to USDT, Tether issues several other digital currencies tied to fiat currencies and gold, and has recently expanded its investments into bitcoin mining, artificial intelligence, and telecommunications.

While Tether’s success is evident, questions regarding the quality of the assets backing USDT have long been a focal point in the crypto community.