Tether, the largest issuer of stablecoins, has released a report highlighting its remarkable profit of $6.2B over the past year, surpassing the financial giant, BlackRock, in profits.
According to TU Crypto News, Tether’s breakthrough arises from the increased demand for stablecoins for seamless on-ramps and off-ramps.
Tether’s USDT is the most well-known among other stablecoins, playing a crucial role in providing liquidity across cryptocurrency exchanges. Based on financial data, Tether’s profitability is now greater than that of the financial manager, BlackRock, which made $5.5 billion over the same period.
U.S. Treasury Bill Holdings
Moreover, Tether’s rise in profits has been associated with its colossal U.S. Treasury bill holdings and the subsequent rise in interest rates. Holding over $80 billion in reserves, Tether has benefited significantly from its investment in short-term government debt.
Earning substantially high interest rates, this has become a lucrative source of income for them as global interest rates rise. Their conservative investment strategy, focusing on low-risk, interest-generating assets, gives them the flexibility to capitalize on the recent macroeconomic environment.
Profitability and Regulatory Concerns
Furthermore, Tether’s profitability can be attributed to an increase in demand for Tether USDT as a driving factor. Given that Tether USDT provides a safe, reliable, and stable way of moving assets from one cryptocurrency exchange to another, unlike other crypto tokens, it has become an essential tool for individuals and investors alike.
Additionally, Tether’s profitability exceeding that of traditional finance firms like BlackRock marks a shift in the financial space. While trillions of dollars in assets are managed by BlackRock, its profits come from asset management fees, which are affected by market conditions and economic uncertainty. On the other hand, Tether’s business model of issuing stablecoins has proven to be a more profitable model.
Despite its profitability, critics still question its regulatory status and transparency. Some question the validity of the claimed backup liquidity of Tether USDT issued by the company, suggesting it may be a bit unreal. Tether has responded by publishing quarterly reports of its reserves, but this has not succeeded in reassuring the sceptics.
Overall, the stablecoin company continues to face scrutiny from regulators amidst its growth and innovation.
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