Crypto News: As part of a new investment strategy centered around the world’s largest cryptocurrency by market value, stablecoin issuer Tether stated on Wednesday that it would begin regularly purchasing Bitcoin (BTC) for its stablecoin reserves using a percentage of its profits beginning this month.
Tether To Invest Upto 15% Of Its Profits
Tether has stated that it will allot up to around 15% of the realized earnings from investments to the acquisition of BTC and will add the tokens to its reserve surplus. However, the stablecoin giant is omitting any unrealized price appreciation of its reserve assets from this calculation.
According to a statement released by the firm, Tether will not use any third-party custodians as it plans to keep all of its Bitcoin holdings under self-custody. While speaking about maintaining the Bitcoin reserves, the firm was quoted as saying:
Tether believes in the philosophy “Not your keys, not your bitcoin” and takes possession of the private keys associated with all of its Bitcoin holdings.
Tether Calls Bitcoin A “Store Of Value”
The announcement comes just a few days after Tether reported a net profit of $1.5 billion for the first quarter, which accounted for approximately 2% of its reserves. An approximate 85% was kept in cash, cash equivalents, and other short-term deposits, the majority of which were in the form of Treasury bills. Assuming that the net profit stays the same, it will mean that the firm would be buying roughly 74M USD worth or about 2775 BTC each month going forward.
The stablecoin issuer has announced that it would begin making regular purchases of bitcoin from this month onwards in order to further enhance its holdings. However, the issuer “anticipates that the current and future BTC holdings in its reserves will not exceed the Shareholder Capital Cushion” but in turn strengthen and diversify the reserves.
In addition, the company is of the opinion that Bitcoin is an excellent investment opportunity because it has a history of “impressive returns over the past decade” and has proven to be a long-term store of value. The value of the flagship cryptocurrency has increased by around 22,000% during the past decade as things currently stand, the price of BTC is hovering around $26,681 which represents a drop of 1.14% over the past 24 hours.
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