- Tether expects its Q1 earnings at roughly $700 million.
- The SEC launches an assault on stablecoins and USDT might be caught in the crosshairs.
Tether has expressed optimism about its profits in Q1, especially now that March is approaching its conclusion. The demand for USDT surged in during the quarterly period for numerous reasons but the road ahead might have some bumps.
According to the latest reports, Tether expects more than $1 billion in total revenue from USDT in Q1. It also anticipates a $700 million profit for the quarter.
The first three months of March have so far been quite eventful for USDT and the rest of the stablecoin segment following USDC’s depegging.
Tether estimates it will make $700 million profit in the March quarter, taking its total excess reserves to over $1 billion. The value of all the USDT in circulation has grown substantially this month from $70.98 billion on March 1 to $78.14 billion on Thursday. CNBC…
— Wu Blockchain (@WuBlockchain) March 24, 2023
USDT saw a large influx of volumes especially as many people migrated from USDC. This new volume added to Tether’s transaction revenue generated from USDT transactions.
Tether also increased USDT supply in Q1 and continues to increase it further, according to recent data. There was roughly $77.6.14 billion worth of the stablecoin in circulation on Thursday according to the latest Glassnode data.
Source: Glassnode
But can this surge in circulating supply match the prevailing stablecoin demand? A comparison between active addresses and transfer volumes may provide some interesting insights.
Active addresses peaked in mid-February, during which there was a surge in daily transfer volume. This is likely because of the outflows as the market saw ample demand.
Source: Glassnode
Interestingly, the USDT transfer volume had its highest peak on 11 March. This was mainly because of the aforementioned inflows due to USDC migration.
However, transfer volume dropped since then due to outflows as demand for cryptocurrencies surged.
U.S. regulator finds inroad to criticize stablecoins
USDT’s growing circulation might be in preparation for more demand but it has not been without concerns.
Many crypto proponents have expressed concerns regarding Tether’s ability to provide a proper guarantee of reserves. The SEC recently took advantage of those concerns to launch criticism against Tether and USDT.
?Ω?#SEC just warned all anons that "proof of reserves" is meaningless, anons may suffer losses from "enforcement of laws", & that "the market for a crypto asset may disappear".
anon they're trying to tell you #Tether is a fraud.
run for you life.https://t.co/21ua7iI353 pic.twitter.com/hNEDkOnsp5
— ⚯ M Cryptadamus ⚯ | @cryptadamist@universeodon.com (@Cryptadamist) March 23, 2023
In fact, the SEC described proof of reserves as meaningless in a recent statement to investors. The latter constitutes the latest of the market’s concerns.
Regulators have been increasingly pushing back against cryptocurrencies and stablecoins. However, some view this as a good sign that regulators are concerned about the crypto market appearing as a threat to the traditional finance system.
Regardless of the current market views, there are still concerns about potential bank runs that may trigger the loss of stablecoin pegs in the future.
