(Bloomberg) -- Tether Holdings Ltd., the British Virgin Islands-incorporated operator of the largest stablecoin, said it posted record net profit of $4.52 billion in the first quarter, largely driven by interest earned from its holdings of US Treasuries and appreciation in Bitcoin and gold. 

The market value of Tether’s USDT token has climbed to above $110 billion, as the demand for the stablecoin rose during the latest crypto bull market. The company said in a statement Wednesday that it issued over $12.5 billion USDT in the period, and about $1 billion of the profit came from “net operating profit,” which is primarily derived from interest payments from Treasuries. 

Stablecoins are a type of cryptocurrency that typically aim to keep a one-to-one value with fiat currencies such as the dollar. They are usually backed by cash and cash equivalents. Tether said it increased its direct and indirect ownership of Treasuries in the first quarter, now exceeding $90 billion. Most of the reserves backing its stablecoins are deposited in Treasuries, from which Tether earns profits on the interest paid.

Outside of the profit derived from US Treasuries, Tether said the remainder was made in mark-to-market gains from its holdings of Bitcoin and gold. The company had about $5.4 billion in Bitcoin and $3.7 billion in precious metals at the end of the quarter, according to a third-party attestation by BDO. Bitcoin’s price rallied significantly at the start of the year, ending the first quarter up about 66%.  

Third-party attestations are not the same as financial audits, as they are limited to a snapshot in time and do not allow full access to a company’s books. The quality of assets backing stablecoins like USDT has come under intense scrutiny in recent years, as regulators grew concerned about the liquidity of operators’ reserves and if they could withstand mass redemption requests while under market pressure. 

In February 2021, Tether agreed to publish quarterly reports on its reserves as part of a settlement with US authorities over allegations that it hid the loss of funds and lied about reserves in prior years.

Tether also said Wednesday that net equity stood at $11.37 billion at the end of March, and the value was a “notable uptick” from $7.01 billion at the end of last year.

The company this week also announced that it invested $200 million in Blackrock Neurotech, a maker of brain-computer interface technology. Its quarterly report said its investment portfolio is at $5.1 billion.

(Update to includes a breakdown of results, starting in the second paragraph.)

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