The firm stated it would invest 15 per cent of its net profit into bitcoin to diversify the reserves that back its USDT token, which intends to stick to a 1-to-1 peg to the U.S. dollar

Cryptocurrency giant Tether on Wednesday stated that it is going to buy bitcoin worth hundreds of millions of dollars to back the world’s biggest stablecoin.

The firm stated it would invest 15 per cent of its net profit into bitcoin to diversify the reserves that back its USDT token, which intends to stick to a 1-to-1 peg to the U.S. dollar.

That would come to nearly $222mln, based on the firm’s latest attestation report, which provides a breakdown of the assets that constitute its USDT reserves and surplus reserves and profits.

According to a Tether spokesperson, the bitcoin it buys would amount to just a small part of its overall net profit, with the majority of surplus income being spent on operating the business, including bank fees.

The goal is to keep the value of Bitcoin portfolio well below the volume of our total surplus reserves that accounted for 2.48 billion at the end of the first quarter of this year, while bitcoin holdings accounted for 1.5 billion, the spokesperson stated.

USDT is the biggest stablecoin in the market, with a circulating supply of over $82.8bln, as per CoinGecko data. Its rivals include Circle’s USD Coin and Binance’s BUSD.

Traders use stablecoins to move in and out of various cryptocurrencies without converting money back into fiat currencies.

The decision to invest in Bitcoin, the world’s first and biggest cryptocurrency, is reinforced by its strength and potential as an investment asset, Tether Chief Technology Officer Paolo Ardoino said in a statement.

He stated that bitcoin has time and again showed its strength and has come up as a long-term store of value with significant potential for growth. Bitcoin’s restricted supply, decentralized nature, and wide adoption have positioned it as a preferred choice among institutional as well as retail investors.

The step would make Tether a further bigger holder of bitcoin — the company already holds more than $1.5bln worth of bitcoin on its balance sheet — and follows moves from prominent investors such as Paul Tudor Jones and MicroStrategy co-founder Michael Saylor to collect vast stockpiles in the belief that the token is a hedge against the impact of currency depreciation and inflation.