Tether’s USDT has etched itself deeper into the history books, crossing for the first time a staggering $100 billion market capitalization. The prominent stablecoin used widely across crypto markets momentarily topped the threshold on March 4th according to CoinGecko data.
TLDR
- Tether’s USDT stablecoin reaches historic $100 billion market capitalization
- USDT market cap now 9% higher year-to-date, with a sizable lead over its closest rival USDC
- Tether claims each USDT is backed 1:1 by reserves of yield-bearing US Treasury Bills
- Company reported record $2.85 billion profit in Q4 2023, fueled partially by $1 billion in T-Bill income
Tether’s meteoric growth further separates it from rival stablecoins like Circle’s USD Coin (USDC), its next largest competitor. USDT now holds a commanding $71 billion lead in market cap over USDC, which has also expanded in 2024 but at a more modest pace.
At a valuation equaling massive public companies BP and Shopify, Tether cementing the $100 billion level speaks to its pivotal role facilitating trades across digital asset exchanges. As the broader crypto market has rebounded 50% off its 2022 lows, USDT provides traders with an essential fixed-value tool amidst Bitcoin and altcoins’ intense volatility.
The organization responsible for issuing USDT asserts each token is backed 1-to-1 by reserves composed chiefly of US Treasury Bills. These short-dated government debt instruments pay interest to holders, allowing Tether’s reserves to accumulate yield.
Tether’s latest quarterly update showed it holding over $80 billion worth of T-bills – likely making it one of the largest institutional buyers of such securities globally. It also disclosed $2.8 billion of Bitcoin reserves, showing increased exposure to the bellwether cryptocurrency.
Buoying Tether’s rapid expansion was a record $2.85 billion profit last quarter, partially fueled by $1 billion in interest income off its prodigious T-Bill stockpile. Yet lingering doubts still swirl regarding its actual reserve composition and risk management.
Tether had previously pledged to eliminate all lending activities from its reserves by early 2023, but walked back those promises as 2022 closed. Loans still constituted $4.8 billion of its holdings as of December 31st, heightening concerns for some around asset contamination.
Making matters murkier is USDT’s chain breakdown, with Tron now accounting for over half its current circulation. A recent UN report controversially labeled Tron a haven for cybercrime and money laundering, though Tether defenders argue Transaction tracing allows illicit flows to be monitored.
While questions linger on aspects of its operation, Tether passing the $100 billion mark cements its supremacy among stablecoins. Prospects for continued growth look solid amidst ballooning crypto market activity. Yet USDT will still need to take concerted steps addressing transparency, compliance and risk vulnerabilities.
