Tether, Issuer of USDT, Reports 30% Drop in Profits

USDT stablecoin issuer Tether released its Q2 2023 certification report on July 31, and according to the report, Tether posted an “operating profit” of $1 billion in the second quarter, down of approximately 30 times.% of first-quarter earnings of $1.48 billion.

While its $1 billion “operating income” is down from Q1, there is a 30% increase from Q2 2022. Tether also disclosed a share buyback worth $115 million and its other investments in energy-related initiatives that are funded with a portion of second-quarter earnings.

“Investment in energy-related initiatives is not included in the CRR, as Tether does not consider them an eligible reserve for the token in circulation, the company clarified.

Tether sees a rise in overbookings

Tether’s excess reserves in the second year of this year increased by $850 million, bringing the total excess reserves to around $3.3 billion. These excess reserves are profits that the company does not distribute as dividends to shareholders. Instead, it holds them to bolster its 100% reserves used to back all USDT in circulation and maintain the token’s stability.

The company explained that keeping an additional 4% of its assets in its reserves is one of its risk management decisions, as it aims to protect client funds. He believes this move is necessary and one that other players should emulate, as undercollateralization brings weakness to the entire system.

Tether has faced criticism in the past, especially regarding its reserves and whether or not USDT tokens in circulation were 100% backed. However, despite these accusations, the USDT continued to maintain its peg with the US dollar (re-pairing very quickly each time it fell below one dollar).