Tether's USD₮ Stablecoin: A $13 Billion Profit Powerhouse

Tether's USD₮ stablecoin has emerged as a dominant force in the cryptocurrency market, with the company reporting a record-breaking $13 billion in net profits for 2024. This impressive performance underscores Tether's growing influence in the broader financial landscape and highlights the importance of stablecoins in the digital asset ecosystem.

Tether's annual profit was driven by a combination of factors, including $7 billion in profits from U.S. Treasuries and repurchase agreements, $1 billion from other traditional investments, and $5 billion in unrealized profits from its gold and Bitcoin holdings. The company's holdings of U.S. Treasuries made it the 13th largest holder of the asset globally, signaling its significant presence in the market.

Tether's excess reserve buffer topped $7 billion for the first time, growing 36% year-on-year. This metric, analogous to a bank's liquidity coverage ratio, demonstrates the company's commitment to maintaining a robust reserve buffer to ensure the stability of its stablecoin. During the collapse of LUNA in May 2022, Tether was able to process $11.1 billion of withdrawals, further showcasing its operational resilience.

In an effort to enhance transparency and establish trust in its stablecoin reserves, Tether released its Q4 2024 assurance opinion, conducted by global independent accounting firm BDO. This marks the first independent assurance opinion released by the company since Consumers' Research criticized Tether for failing to provide an audit proving USD₮ is backed 1:1 by USD.

Tether's operational efficiency has been a key factor in its success. With an estimated 400 million users globally, the company's profit per user stands at approximately $32.50. While modest compared to traditional financial services firms, Tether's 400 million customer base and profit of $104,000,000 per employee is a testament to the company's widespread reach and adoption of USD₮.

Tether's influence has also drawn the attention of regulators and lawmakers. During his confirmation hearing for Commerce Secretary, Howard Lutnick, CEO of Cantor Fitzgerald, faced scrutiny over his firm's relationship with Tether. Lutnick affirmed his support for USD-denominated stablecoins to be 100% backed by U.S. Treas