Tether CTO Paolo Ardoino believes USDT is becoming “the safest asset in the world” amid the banking crisis.
Cryptocurrency company Tether - issuer of the stablecoin Tether
Tether CTO Paolo Ardoino told Cointelegraph at the 2023 Paris Blockchain Week that it expects to make $700 million in profit in the first quarter of 2023, which is comparable to the profit in the last quarter of 2022.
“I don’t have final numbers yet, but profits this quarter will probably be in line with the last quarter of 2022,” Ardoino said, adding that in the fourth quarter of 2022, Tether generated $700 million in profits. He added that Tether also “added $950 million” on December 31, 2022, noting:
“So that means our equity in the company will grow to $1.5 billion or $1.7 billion, and that’s on top of the reserves that we have, which back 100% of the assets.”
The Tether executive went on to say that USDT is becoming the “safest asset in the world to hold” because the company is different from banks that are based on a fractional reserve model. He explicitly referenced the ongoing crisis in the U.S. banking system, where banks such as Silicon Valley Bank (SVB) collapsed due to problems with the fractional reserve model.
Ardoino also mentioned that he is a fan of the major cryptocurrency Bitcoin
Bitcoin is Tether’s hedge, which means:
“I like Bitcoin, that’s our hedge, that’s why we invest in Bitcoin, because we don’t trust people who take such a big risk on customer deposits.”
As previously reported, Tether drastically cut its commercial paper backing last year, ultimately reducing it to zero by the end of 2022. In addition to removing commercial paper from its reserves, Tether also replaced these investments with U.S. Treasury bills.
The news comes as Tether continues to increase its market dominance, with USDT's market capitalization increasing by approximately $8 billion since February 28. At the time of writing, USDT's market capitalization reached $79 billion, its highest level since May 2022, according to data from CoinGecko.
As USDT’s market dominance rises, Circle’s rival stablecoin USD Coin
The U.S. central bank has been losing market share, with its market value down 18% since the end of February.
Circle faced major issues due to the fallout from the SVB debacle, with the USDC stablecoin briefly losing its 1:1 peg to the U.S. dollar. The stablecoin was subsequently re-pegged when Circle announced Cross River as a new banking partner and expanded its relationship with BNY Mellon.
