Tether, the company known for its market-leading stablecoin USDT and its controversies, has released a new quarterly attestation with some interesting metrics. According to the report, the company has about 60 employees and quarterly profits above $1 billion. This figure is hard to believe, yet there is no real reason to disbelieve it.
Tether holds a lot of U.S. Treasuries and a lot less private debt, including $55.8 billion of U.S. Treasury bills, $8.9 billion of overnight reverse repurchase agreements, and $8.1 billion of money market funds. The amount of assets Tether shows in its attestation report exceeds $86 billion, which is a few billion higher than USDT’s market capitalization right now.
The company blog post also states that “Tether’s operational profits are over $1B for the time period of April 2023 to June 2023, which corresponds to a significant 30% increase quarter over quarter.” From a per-capita perspective, Tether might be a world leader in U.S. Treasuries held per-capita and operating profit per-capita.
What could explain the company’s outsized profits? Tether’s profitability makes sense in the context of the amount of Treasuries it holds. Interest rates have gone up a lot over the last year and Tether’s business clearly benefits from that. One-month Treasuries yield 5.378% right now, USDT yields nothing, Tether collects the difference.
Tether has let its cash balance dwindle to just $90.8 million, down from $481 million in March 2023 and $5.3 billion in December 2022. This is likely because Tether is rolling cash into Treasuries because they yield 5.378% instead of nothing. However, if there is a run for USDT redemptions it would suit Tether to have more cash than less cash.
While Tether’s quarterly profits are remarkable, it is important to note that “assurances and attestations are not audits” and should not be treated as such. Audits are performed to discover issues that may not have been known prior to the audit and attestations simply review how true data or information is when compared to a stated purpose.