With renewed turmoil in the cryptocurrency space, Tether and USDT have frequently been rumored to be on the verge of collapse, yet in fact, their net profit reached a staggering $4.5 billion in the first quarter of this year; what is the reason behind this?
Many believe that the cryptocurrency space is merely a large fund scheme or even a scam, viewing Bitcoin as a tool for the U.S. government to exploit investors, and claiming that USDT is a Wall Street financial trap, convinced it will inevitably collapse. However, a little investigation reveals that Bitcoin has no ties to the U.S. government, and USDT is not as fragile as presumed. Today, let us deeply analyze whether the USDT issued by Tether truly has the risk of a crisis.
Firstly, the claim that the rampant issuance of USDT will lead to a collapse is without basis. USDT is a stablecoin pegged 1:1 to the U.S. dollar, and its operating mechanism is that 1 USDT can only be issued upon depositing 1 dollar, ensuring price stability. Although some are concerned about the risk of over-issuance, one can refer to Tether's quarterly audit report (issued by the third-party auditing firm BDO) to see that the issuance of USDT is regulated, making the over-issuance claim unfounded.
Secondly, the rumor that funds are being misappropriated to speculate on high-risk assets is completely false. Tether's official website clearly lists the details of its reserves, with most funds directed towards low-risk assets like U.S. Treasury bonds, reverse repurchase agreements, and money market funds, such a prudent allocation greatly reduces the likelihood of a crisis.
Thirdly, the notion that insufficient profitability would lead to a collapse is completely misguided. The USDT profit model is diverse and stable: first, interest income, with users depositing funds mainly for purchasing low-risk assets like U.S. Treasury bonds, yielding an annual return of about 4%-5%; second, service fees, charging a 0.1% fee for each transaction using USDT, and each user must pay a service fee of $150; third, lending services, where Tether provides USDT financing to businesses and collects interest; fourth, market repurchase profit, buying back at low prices during market panic and selling at normal prices after stabilization to earn the price difference. With these, Tether achieved a net profit of $4.5 billion in the first quarter, ensuring a worry-free capital chain.
Fourthly, the argument that excessive spending leads to a crisis is hard to sustain. Tether's main expenses are employee salaries and office space costs, with very little spent on advertising; USDT ads are rarely seen on platforms like YouTube and Google, reducing operational costs. Unlike some exchanges and projects that lay off employees or cut salaries due to market fluctuations, Tether's profitability remains stable. As a giant in the crypto space with banking and central bank functions, its capital chain is solid, making the probability of a crisis extremely low.
The stability of USDT stands the test of time. Behind the rumors lies a misunderstanding and panic about the cryptocurrency space. With prudent capital management and a diverse profit model, Tether maintains strong market competitiveness. Believers in rumors should read public audit reports and market data more, relying on facts to avoid being misled.
