Tether Reports Record $2.85B Profit as Biggest Stablecoin Nears $100B Market Cap

Stablecoin issuer Tether reported a “record-breaking” $2.85 billion of profits last quarter as its flagship token USDT neared a $100 billion market capitalization.

The latest quarterly attestation reported Wednesday showed some $1 billion of the profit came from the interest earned on the company’s vast U.S. Treasury, reverse repo and money market fund investments, which are held to back the USDT stablecoin, according to a Tether blog post. The rest came “primarily” from appreciation of Tether’s other investments such as bitcoin (BTC) and gold.

Through last year, the company booked $6.2 billion in net operating profits, with some $4 billion from interest earned on Treasury holdings. The company has directly benefited from the Federal Reserve’s campaign of raising interest rates to combat inflation, since that effort has lifted payouts from the fixed-income investments Tether buys.

According to the latest quarterly attestation signed by BDO Italy, Tether disclosed $97 billion of assets in reserve against $91.6 billion in liabilities as of Dec. 31. This translated to $5.4 billion of excess reserves backing Tether’s stablecoins.

Tether’s USDT is the most popular stablecoin and key plumbing in the crypto market. It now boasts an all-time high $96 billion market capitalization, having added over $10 billion since late October as digital asset trading rejuvenated. U.S. interest rates at a 22-year high are also a boon for the company, as it doesn’t pass on yield earned on reserves to USDT holders.

The company also issues several other digital currencies pegged to fiat currencies and gold, and recently made investments in bitcoin mining, artificial intelligence and telecommunications.

For years, USDT and the quality of the assets backing it have been a key source of concern in the crypto markets.

Howard Lutnick, chairman and CEO of the Wall Street investment bank Cantor Fitzgerald that manages a portion of Tether’s assets, dismissed those concerns earlier this month, saying that Tether actually has the money the stablecoin issuer claims to have.