According to Tether’s chief technology officer Paolo Ardoino, Tether, the issuer of stablecoin USDT, is expecting to make a $700 million profit in the first quarter of 2023, which is similar to its profit from the last quarter of 2022. Tether has grown to $1.5 billion or $1.7 billion due to the additional profits and reserves generated by the company.
Ardoino claims that USDT has become the “safest asset to hold in the world” as Tether differs from banks with a fractional reserve model. Ardoino also mentioned that Tether’s hedge is Bitcoin, which is why the company invested in it, as they do not trust banks that take risks with customer deposits.
Also Read: Circle CEO: USDC Reserves at Silicon Valley Bank Safe and Available
Tether’s Market Dominance
Tether’s USDT market dominance has increased, with the stablecoin’s market capitalization growing by about $8 billion since February 28. As of now, USDT’s market value stands at $79 billion, which is the highest level since May 2022, according to CoinGecko.
In contrast, USD Coin (USDC), Circle’s rival stablecoin, has lost 18% of its market share since late February. Circle has experienced significant issues due to its exposure to the collapse of Silicon Valley Bank (SVB), with USDC briefly losing its 1:1 peg with the US dollar. The stablecoin eventually returned to its peg after Circle announced Cross River as a new banking partner and expanded ties with BNY Mellon.
The announcement of Tether’s expected profit in Q1 2023 is significant news for the cryptocurrency industry, as USDT has the highest market value among stablecoins. Tether’s assertion that USDT is becoming the safest asset to hold in the world due to its unique structure could influence investors to prefer it over other stablecoins.
Additionally, Circle’s exposure to the collapse of SVB and the subsequent issues faced by USDC highlight the risks associated with the stablecoin industry. As such, it is essential for investors to remain cautious when investing in cryptocurrencies and stablecoins.
