According to analysts, stablecoin issuer Tether could become one of the most profitable companies in the US this year, potentially surpassing asset manager BlackRock in earnings. Tether’s profits are expected to reach $6 billion in 2023, as its stablecoin USDT is backed by high-earning US treasuries. The company operates similarly to a bank, investing deposits in reserves like Treasuries and earning a 5% return. Tether’s excess reserve surplus reached a record high of $2.44 billion in Q1, including $1.48 billion in net profit. With an estimated $6 billion in profits this year, Tether is considered a financial giant. The demand for USDT stablecoins continues to grow, with Tether holding a massive market share of 64%.
In contrast, rival stablecoin issuer Circle has experienced a decrease in supply due to exposure to US regulators and losses from Silicon Valley Bank. The supply of Circle’s USDC stablecoin has fallen by 36% or $16 billion since the start of the year. Regulatory crackdowns have also removed the third-largest stablecoin, Binance USD, from the market, leaving only one major player. This consolidation in the stablecoin ecosystem is seen as detrimental to decentralization, diversity, and investor protection.
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