Tether issues a stablecoin which is designed to maintain a constant value of $1. It is widely used as a way of moving money in cryptocurrency without being exposed to price swings in other cryptocurrencies such as bitcoin and ether.

The company says it maintains its dollar peg by holding dollar-based reserves which match the volume of cryptocurrencies it has created.

While the dollar-pegged tether token is pegged at $1, it has in recent days traded as high as $1.0020, reflecting increased demand from investors betting on a surging bitcoin and using tether as a means of exchanging fiat currencies for crypto ones.

"Traders were willing to pay a premium on tether in order to get their orders through," said Justin D'Anethan, head of Asia-Pacific business development at digital assets market maker Keyrock.

"Ironically, tether has always been FUDed (plagued by anxiety about their legitimacy) as they resisted disclosing their reserves and balance sheet for years," D'Anethan said.

"Nonetheless, they’ve been around and stood the test of many volatility events, from 2017 up to now, and an overwhelming majority of cryptocurrency pairs are denominated in USDT -which explains the premium in times of massive bull runs and enthusiasm for the crypto space."

Around $124 billion worth of tether had changed hands over the past 24 hours, CoinMarketCap data showed.

U.S. regulators have warned banks that stablecoin reserves could be subject to rapid outflows, for example if holders rushed to exchange such tokens back into traditional currency.

Tether agreed to provide quarterly reports on its reserves for two years, as part of a 2021 settlement with the New York Attorney General's office.

At the end of 2023, Tether's reserves held $63 billion of U.S. Treasuries, as well as $3.5 billion of precious metals, $2.8 billion of bitcoin, $3.8 billion of "other investments" and $4.8 billion of "secured loans", its latest report says.