Tether’s robust performance in 2023 shows rising demand for stablecoins and closer ties between crypto firms and the traditional financial system.
Stablecoin-issuer Tether had a strong year in 2023, raking in $6.2 billion in net profits, primarily from passive income from United States Treasury securities backing its USDT stablecoin reserves.
Over the last year, Tether capitalized on the heightened concerns regarding the U.S. banking systems and potential contagion effects on other stablecoins, such as USD Coin (USDC). But the firm was not immune to fear, uncertainty and doubt. In response, Tether increased its exposure to high-level assets to back its stablecoin, primarily short-term U.S. Treasurys, which are considered one of the safest assets worldwide.
As a result, the crypto company could profit from the higher interest rate environment, thus strengthening its financial position while improving its risk profile by providing a safer asset as a backup to its reserves. Considering the uncertain times the crypto industry faced in 2023, it’s a good deal.
Tether’s growth also reflects a rising confidence level around stablecoins as a key element for replacing traditional financial services with crypto-based alternatives.
Stablecoins offer a fast, efficient and often cheaper method for conducting transactions, especially cross-border payments. Many cryptocurrency exchanges and lending platforms offer yields ranging from 7% to 20% for stablecoin deposits.
Finally, Tether’s performance and position as one of the world’s top buyers of U.S. Treasury bills illustrate a tighter link between digital assets and the overall financial system, and how stablecoins may play an increasingly important role in the U.S. dollar’s strength in the near future.
This week’s Crypto Biz also explores Bitpanda’s bet on institutional capital, more political figures joining Coinbase’s board and Global X withdrawing its application for a spot Bitcoin (BTC) exchange-traded fund (ETF).
Tether posted a record $2.85 billion profit in Q4, driven by T-bills
Tether Holdings, the company behind the stablecoin Tether (USDT), has generated “a record-breaking net profit” in the last quarter of 2023, driven by Treasury interest and a strong performance from other assets. According to Tether’s attestation report on Jan. 31, the company recorded a net profit of $2.85 billion in the fourth quarter of 2023, including up to $1 billion in net interest from U.S. Treasury securities. Gold and Bitcoin reserves contributed to the remaining balance. Total assets under management for Tether include $80.3 billion in U.S. Treasurys, $2.8 billion in BTC, $3.5 billion in gold and $1.5 billion in venture capital investments.
Tether Q4/2023 attestation is out.
– profit for the quarter: $2.85B, of which ~$1B in net operational profit (mainly US t-bill interests), ~$1.85B from gold and #bitcoin holdings.
– total profit for 2023: $6.2B.
– cash & cash equivalents cover now 90% of all… https://t.co/AXjDw33QTc
— Paolo Ardoino (@paoloardoino) January 31, 2024
Cboe exchange withdraws application to list Global X spot Bitcoin ETF
The Cboe BZX Exchange has withdrawn its application for a proposed rule change with the United States Securities and Exchange Commission, which could have allowed it to list shares of Global X’s spot Bitcoin ETF. In a Jan. 30 notice, the U.S. Securities and Exchange Commission announced that Cboe BZX had withdrawn the application for listing and trading shares of the Global X Bitcoin Trust, first filed in August 2023. The commission had twice extended consideration of the application in September and November. Spot Bitcoin ETFs were approved by the SEC for the first time on Jan. 10. According to data from Jan. 26, the Grayscale Bitcoin Trust had experienced roughly $5 billion in outflows following its conversion into an ETF, while other approved ETFs had together a positive net flow of $759 million.
Bitpanda launches institutional crypto platform with cold storage
Austrian fintech Bitpanda is launching an institutional-grade cryptocurrency trading platform in response to the growing demand for institutional crypto services in Europe. The new platform, called Bitpanda Wealth, targets high-net-worth individuals, family offices, external asset managers and corporate treasuries. Eric Demuth, co-founder and CEO of Bitpanda, told Cointelegraph the company is focusing on a market that is “underserved” in the region. According to the company, Bitpanda Wealth will provide services that facilitate crypto investment, management, and reporting, as well as leverage products, exchange-traded funds, commodities, and other assets. Bitpanda has been licensed as a virtual asset service provider in a range of European jurisdictions, including Austria, Norway, Germany, France, Czechia and Sweden.
Coinbase hires former U.K. finance minister George Osborne for battle against SEC
Coinbase Global has appointed former United Kingdom Chancellor of the Exchequer George Osborne as an adviser. The former finance minister brings significant experience in government and international affairs, having served as Chancellor from 2010 to 2016. Osborne has also served as an adviser to BlackRock, the world’s largest asset manager, from 2017 to 2021. The crypto firm has been increasingly hiring former politicians amid mounting regulatory pressure. Osborne joins several other notable political figures on Coinbase’s Global Advisory Board, including former United States Senator Patrick Toomey, former U.S. Secretary of Defense Mark Esper and former U.S. Representative Sean Patrick Maloney.
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