Stablecoin issuer Tether USDT -0.05% reached a record $2.9 billion net profit in Q4 2023 and set an all-time high increase in excess reserves backing its tokens in circulation, according to its latest attestation report conducted by global auditing firm BDO.
Net operating profit was around $1 billion, primarily resulting from holdings of U.S. Treasuries, with the rest of the gains largely related to the appreciation in the value of Tether's bitcoin and gold reserves during the quarter.
The profit increased Tether's excess reserves by $2.2 billion to a total of $5.4 billion. The remainder was used to fund project investments, including mining, AI infrastructure and P2P communications, which it does not consider part of its reserves, the firm said.
BDO confirmed Tether's $4.8 billion in outstanding unsecured loans at year-end were fully covered by the excess reserves. Tether said it was proud to have removed the risk of secured loans from its token reserves.
"While such secured loans are widely overcollateralized, Tether accumulated enough excess reserves to cover the entirety of the exposure," the firm stated. "This is in response to the community's past expressed concerns about this part of the portfolio."
Tether's primary business is running the USDT stablecoin, which helped it generate a net profit of $6.2 billion for the year.
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As of Dec. 31, the firm's consolidated reserves amounted to at least $97 billion, including $80.3 billion worth of U.S Treasuries and $3.5 billion of gold. Tether's consolidated liabilities relating to digital tokens issued stand at $91.6 billion, 90% backed by cash or cash equivalents.
"Tether’s Q4 attestation underscores our commitment to transparency, stability, and responsible financial management," Tether CEO Paolo Ardoino said.
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