Paolo Ardoino, Tether’s chief technology officer, said the company estimates that the excess reserve will increase by $700 million in the current quarter, which is not yet over.

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Cryptocurrency giant Tether said Wednesday it will buy hundreds of millions of dollars worth of bitcoin to back the world’s largest stablecoin.

The company said it would invest 15% of its net profit in bitcoin to “diversify” the reserves backing its USDT token, which aims to maintain a 1-to-1 peg to the US dollar.

That would amount to roughly $222 million, based on the company’s most recent certification report, which provides a breakdown of the assets that make up its USDT reserves as well as excess reserves and profits.

A spokesperson for Tether clarified that the bitcoin it buys would only amount to a small portion of its total net profit, with the bulk of the excess income being spent on running the business, including bank fees.

“The goal is to keep the Bitcoin portfolio value well below the size of our total excess reserves which stood at 2.48 billion at the end of Q1/2023, while bitcoin holdings stood at 1.5 billion,” the Tether spokesperson said.

USDT is the largest stablecoin on the market, with a circulating supply of more than $82.8 billion, according to CoinGecko data. It competes with Circle’s USD Coin and Binance’s BUSD.

Stablecoins are used by traders to move in and out of different cryptocurrencies without converting money back to fiat currencies.

“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset,” Paolo Ardoino, CTO of Tether, said in a statement.

“Bitcoin has consistently proven its resilience and has emerged as a long-term store of value with significant growth potential. Its limited supply, decentralized nature and widespread adoption have positioned Bitcoin as a favored choice among both institutional and retail investors.”

The move would make Tether an even bigger holder of bitcoin — the company already has more than $1.5 billion worth of bitcoin on its balance sheet — and follows moves by notable investors such as Paul Tudor Jones and MicroStrategy CEO Michael Saylor to amass huge stock, in the belief that the token is immune to the effects of currency depreciation and inflation.

Analysts and investors have previously told CNBC that bitcoin could see a boost this year due to the influence of so-called “whales” — market players with significant financial firepower, which allows them to buy up huge amounts of tokens.

Tether’s methods of maintaining a $1 value for its token have sparked controversy in the past due to concerns about the quality of its reserve assets. Previously, the company held a large part of its reserves in commercial paper – a form of short-term, unsecured debt issued by companies. This is seen as less secure than other forms of debt, such as US Treasury bills.

Tether sought to allay investor fears by spinning out commercial paper and replacing those fund holdings with only US Treasuries.

In February, the company said it had reduced its holdings of commercial paper to zero.

USDT and its issuer remain a source of contention in the crypto market. The US Department of Justice is executives at Tether are reportedly investigating over possible bank fraud.

Stablecoins were already a hot-button issue for regulators, who have been trying to figure out how to keep the industry in check following the demise of several notable companies in the space.