Tether Holdings, the company behind the flagship USDT stablecoin, recently announced a net profit of over $700 million in the fourth quarter of last year, Bloomberg reports.
This profit was added to the reserve that backs USDT, which is the most traded digital token in the world.
Tether did not reveal how this net profit was generated, but it has not previously released its financial results. The recent attestation of its reserves conducted by accounting firm BDO Italia did not include the figure either.
Stablecoins are cryptocurrencies that are pegged to the value of fiat currencies like the U.S. Dollar. They are required to hold large reserves as collateral in order to maintain this stability.Tether's latest attestation of its reserves revealed that the company held roughly 82% of the Dollar assets backing USDT in cash and cash equivalents. According to data provided by CoinMarketCap, Tether boasts a market cap of $68 billion, which makes it the third biggest cryptocurrency (behind only Bitcoin and Ethereum).
The company makes money through transaction fees for new deposits, redemption fees and verification fees for the new account's KYC process.
The stablecoin issuer has faced its share of controversy, including questions surrounding its financial reporting and the robustness of its reserve backing.
Tether's financial statements do not provide any clarity on its investments and loans, and there is no regulatory oversight of its business. Additionally, Tether's holdings of money market securities make it one of the largest holders of that type of debt, but no Wall Street traders have seen Tether buying these securities.
Following the extremely loud implosion of TerraUSD last May, stablecoins have come under scrutiny from regulators, who are pushing for more transparency from issuers.
Other popular stablecoin issuers, such as Circle, have started issuing reserve attestations on a monthly basis.