Tether, a cryptocurrency firm that is behind the issuance of the stablecoin Tether (USDT), has recently revealed its profit expectations for the first quarter of 2023.
According to the company, they expect that their profits might have surged significantly in the particular quarter.
Tether Expects a $700 Million Revenue
As per the Tether officials, they are expected to generate profits worth $700 million in the particular quarter. According to them, their expectation is to generate similar profit figures they had generated in the fourth quarter of 2022.
It was the Paris Blockchain Week 2023 event where Paolo Ardoino, the chief technology officer (CTO) of Tether, made the revelation.
Ardoino revealed that it is just their expectation about the revenue. He clarified that they currently do not have exact figures for the Q1 of 2023. The figures are still not final so they do not know what is going to happen with the results.
Despite having no confirmed statistics, Ardoino stated that they are confident that they will have met the same profit as the previous quarter.
In the fourth quarter of 2022, the company reported that it had generated $700 million worth of profit. In addition to that, they also had an additional $950 million with them, which was recorded back on December 31, 2022.
While sharing the statistics, Ardoino speculated that they will have a huge reserve on top of the required reserve. As per his calculations, their extra reserve will be about $1.5 billion to $1.7 billion higher than the required reserve.
This means that their assets are fully backed and then they will have at least $1.5 billion on top of the reserved amount.
Tether is Becoming Safer
According to the market analysts, Ardoino felt the need to share this information on a global scale because of the recent happenings in the world of stablecoins.
In recent months, the stablecoin market has become extremely risky and it poses a great threat to the entire stablecoin market.
The initial letdown for the stablecoin market was due to the Terra Network which resulted in the demise of TerraUSD (UST).
After that, it was the USD Coin (USDC) that faced a major downfall due to the closure of the Silicon Valley Bank (SVB). With the SVB going down, Circle, the issuer behind the issuance of USDC, confirmed its exposure of $3.3 billion.
Before the USDC downfall, it was the particular stablecoin that had the largest reserve funds backing it up. With the particular stablecoin going down, USDT became the top choice among USDC traders.
Due to the fall of the SVB, Circle’s $3.3 billion worth of USDC reserves was exposed, causing the de-pegging of the USDC.
As a result, USDT became the top choice among most traders in the crypto market, significantly pushing USDT’s market valuation.
Ardoino Endorsed Bitcoin
In addition to talking about the huge reserves backing the USDT token, Ardoino also talked about Bitcoin (BTC).
The Tether CTO praised the performance of Bitcoin and revealed to people at the event that he is a great admirer of the largest crypto. He confirmed that he is a fan of Bitcoin because it is the top hedge against the USDT.
Tether is Cutting its Paper Backing
Although many have criticized the recent actions of Tether, they have stayed firm in their stance of no longer relying on commercial paper backing.
Tether announced last year that it was reducing its dependence on commercial paper backing. They confirmed that the reduction would be carried out aggressively so things will happen fast.
Turns out, the decision that the company made, worked out in its favor as the banking firms collapsed in the US in mid-March.
If the bank had not toned down on its paper backing, it could have faced an enormous de-pegging with the banks going down, causing their reserves to lose weight.
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