Stablecoin Issuer Tether Says Third-Quarter Profit Was $2.5 Billion

(Bloomberg) -- Tether Holdings Ltd., the British Virgin Islands-incorporated operator of the largest stablecoin, said it posted net profit of $2.5 billion in the third quarter, largely driven by gains realized on its holdings of US Treasuries and gold. 

Closely held Tether, which released the information as part of a third-party attestation by BDO, doesn’t release audited financial statements. The market value of Tether’s USDT token in circulation has climbed to almost $120 billion, as demand for stablecoins rose during the crypto bull market. Tether said it has more than $6 billion in excess reserves. 

Stablecoins are a type of cryptocurrency that typically aim to keep a one-to-one value with fiat currencies such as the dollar. They are usually backed by cash and cash equivalents. Tether said it increased its direct and indirect ownership of Treasuries in the quarter, now exceeding $102 billion. Most of the reserves backing its stablecoins are deposited in Treasury bills, from which Tether earns profits on the interest paid.

Its gold holdings added about $1.1 billion in unrealized profits, while $1.3 billion was derived from its Treasuries exposure in the most recent quarter, according to the report on the company’s blog Thursday. 

Tether said has invested $7.7 billion of profit into areas such as renewable energy, Bitcoin mining, artificial intelligence, telecommunications, and education. Tether’s investing arm owns an additional 7,100 Bitcoin as of Sept. 30.  

In February 2021, Tether agreed to publish quarterly reports on its reserves as part of a settlement with US authorities over allegations that it hid the loss of funds and lied about reserves in prior years.

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