Tether, the operator of the world’s largest cryptocurrency pegged to the US dollar, is confident in its relationship with the US government, in part due to its large holdings in US government bonds, which are used to back the USDt stablecoin. are.
As Tether celebrates its 10th anniversary, Cointelegraph spoke to CEO Paolo Ardoino about what makes Tether a major player in the crypto industry.
During the discussion, Ardoino welcomed competition in the stablecoin market, emphasized Tether’s focus on developing countries, and emphasized Tether’s strong ties with the United States.
A brief history of Tether USDt
Tether’s USDt (USDT) was originally named Realcoin by Bitcoin Foundation director Brock Pierce, software engineer Craig Sellers, and entrepreneur Reeve Collins, and was launched on October 6, 2014. Established.
The goal was to create a stablecoin that would maintain a 1:1 peg with the US dollar and bring stability to a volatile crypto market.
Three years after its launch, USDT’s market capitalization reached $1 billion for the first time, and the stablecoin’s market value has continued to rise ever since.
By July 2020, it had exceeded $10 billion, an increase of about 900% in about three years. In March 2024, it reached the milestone of $100 billion market capitalization, significantly outpacing competitors such as USD Coin (USDC).
USDt and competitors’ tether in market value from 2015 to October 4, 2024. Source: CoinGecko
Currently, USDT has a market size of $120 billion, making Tether a major player in the industry with profits exceeding BlackRock by 2023.
Ardoino believes that the reason Tether has grown at such an incredible pace is because USDT’s model is simple and easy for the average person to understand.
“In other words, when you send us dollars, we send you an equal amount of USDT. When you send back USDT tokens, we send back dollars. We then use that reserve to Invest in Treasury bills and some other safe assets. It’s very simple,” Ardoino explained.
Ardoino mentioned more challenging projects like algorithmic stablecoins and said the industry tends to make things very complicated. “Only simple things work in the long run, and that’s what we’ve done more than anyone else,” he added.
What has Tether done right and wrong since its launch?
Beyond simplicity, Ardoino highlighted two key points that have helped Tether significantly beat its competitors.
First, Tether has remained focused on stablecoins for the past decade, undeterred by trends such as the new coin offering (ICO) boom in 2017 and the rise of non-fungible tokens in 2021.
“What Tether was so great about was inventing the stablecoin industry and being very focused on the most important applications and use cases for stablecoins,” Ardoino said.
The CEO said Tether has never promoted the use of USDT in decentralized finance because it is focused on supporting “those who need alternative payment systems the most.” Ta.
Ardoino believes Tether’s second greatest accomplishment is understanding who needs USDT the most.
Paolo Ardoino, CEO of Tether. Source: Bloomberg
According to the CEO, the biggest demand for stablecoins comes not from developed countries like Europe or the US, but from developing countries like Argentina, Turkey and Vietnam, which need constant access to dollars.
“That’s something we realized before anyone else: People want to hold that dollar in digital form rather than cash, because it’s much more convenient,” the CEO said. He said:
“There is no point for us to compete in the US or Europe. We have to focus where we are needed most.”
However, there are things Tether could have done better, and that has to do with how it deals with the growing criticism of USDT as it develops as one of the largest stablecoins.
“We needed to explain ourselves more forcefully and be transparent about everything we do,” Ardoino said, referring to the period from 2017 to 2021. .
Ardoino said Tether has responded aggressively to criticism since 2021. The company responded to the criticisms individually and established that the facts do not support the specific accusations.
Related: Tether USDT market share rises 20% to reach 75% in 2 years
Ardoino emphasized that Tether will foster competition in the stablecoin market, as without competition there would be no stablecoin industry. He added that there should always be at least three to six stablecoins that perform very well globally.
Tether’s relationship with the US government
While Tether focused more on developing countries, it did not overlook its relationship with the United States. Ardoino said Tether has a “very good relationship” with the U.S. government and its compliance efforts with local governments are “much better” than its competitors.
“Tether is the only stablecoin deployed by the Federal Bureau of Investigation and the U.S. Secret Service,” said Tether’s CEO, noting that the company also has 180 law enforcement agencies in 45 countries.
Tether also positions itself as a good friend of the United States, as it holds approximately $98 billion in U.S. Treasury securities, making it one of the world’s largest holders of U.S. debt.
Major foreign holders of U.S. Treasury securities as of April 2024. Source: Statista
“I think Tether is the U.S. government’s best friend because the U.S. owns more U.S. Treasuries than Germany and far more than any other competitor or any financial institution in the world,” Ardoino said. said. He added:
“We are pleased to diversify ownership of U.S. Treasury securities and further strengthen America’s resilience.”
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