tether, the largest issuer of stablecoins on the market, saw its market capitalization reach a new record to exceed $83.2 billion.
The stablecoin (USDT) is pegged at a one-to-one ratio to the US dollar. It is supported by cash and cash equivalent reserves. Against all odds, the stablecoin was able to recoup the $20 billion in market value it lost following the collapse of rival TerraUSD.
“These numbers highlight that people want access to financial freedom, and when they have access to it, they will use it,” said Paolo ArdoinoCTO of Tether, in a statement.
“Tether has repeatedly demonstrated its resilience in the face of market volatility. And with our industry-leading transparency practices, Tether has proven it can be trusted. Customers react accordingly.”
The instability that has rocked the crypto market over the past year has seen Tether, along with other major stablecoins, lose much of their market capitalization. Many investors had indeed chosen to leave the market in a context of heightened uncertainty.
While Tether has managed to recover the value it lost last year, other stablecoins have not been so lucky.
For exemple, the USD Coin (USDC), the second largest stablecoin on the market, currently has a market capitalization of around $29 billion. That amount is down sharply from its all-time high of $56 billion, according to data from CoinGecko.
According to researchers from KaikoTether is used in more than 50% of all transactions on centralized exchanges.
Historically, many controversies have surrounded Tether: the company has faced numerous allegations questioning the level of its reserves. Some claimed that these reserves were insufficient to ensure its parity with the US dollar. Others have questioned the quality of the assets making up these reserves.
In 2021, the New York Attorney General reached a settlement with Tether, after accusations that the company was mixing funds from its retail and business customers. The prosecutor had also accused Tether of providing false information about its reservations to investors.
Tether and its sister company Bitfinex have never admitted to wrongdoing.
Tether starts mining Bitcoin
Tether recently announced that it will set up a Bitcoin mining operation in Uruguay. This operation will use renewable energy in an effort to diversify its revenue mix and to “support and promote the sustainable mining of Bitcoin”.
Tether’s commitment to the bitcoin ecosystem goes even further: the company will in fact acquire bitcoins every month.
Last month, the company announced that it would change its cash management strategy to invest part of its net profit in Bitcoin.
The company has pledged to use up to 15% of its net profit to buy Bitcoinfollowing in the footsteps of the automaker You’re here and technology society MicroStrategy.
Tether also announced that it made a net profit of $1.48 billion in the first quarter.
According to company statements, “approximately 85% of our investments are denominated in cash, cash equivalents and other short-term deposits.” The amount of stablecoin in circulation is up 20% quarter over quarter and the company also holds 2.5 billion in excess reserves (in addition to the minimum 100% reserves).
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