Tether Holdings, the issuer of the USDT stablecoin, is expanding beyond the crypto industry and exploring new ventures in traditional finance (TradFi), including the possibility of lending to commodity trading companies. Bloomberg News reported on October 14th, citing CEO Paolo Ardoino.
Tether already provides U.S. dollars to commodity traders, sectors where access to credit is critical to sustaining multimillion-dollar shipments such as oil, metals and agricultural products, people told Bloomberg News. Discussions are said to focus on financing.
Ardoino confirmed the rumors in an interview with Bloomberg, but did not provide further details about his plans or how much he would invest. However, he clarified that these explorations will remain separate from the company’s core stablecoin business.
While large companies like Trafigura Group enjoy wide access to a reported $77 billion in credit lines from 150 financial institutions, smaller traders struggle to secure funding. This often happens. Tether’s alternative approach could prove attractive because its loans are not subject to the regulatory conditions faced by traditional lenders and could potentially speed up transactions.
The company is looking at ways to leverage the liquidity and stability provided by USDT to expand its use in mainstream global commodity trading, the report said, according to people familiar with the matter.
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Tether reported a profit of $5.2 billion in the first half of 2024, most of which was related to the company’s investments in traditional assets such as U.S. Treasuries, for a total of $97.6 billion. The company’s exposure to U.S. debt exceeds major nation-states such as Germany, the UAE and Australia.
The company has experienced impressive growth and maintains a dominant position in the stablecoin space, with USDT’s market capitalization approaching $120 billion, the highest value ever for a stablecoin.
The move is the latest in Tether’s efforts to channel its significant growth into new businesses.
Tether has been expanding into new areas in recent months, starting with an expanded focus on artificial intelligence (AI) announced in March.
A month later, in April, Tether created four new business units focused on data, finance, power, and education. Less than two weeks later, the company made its first investment in neuroscience by acquiring a stake in brain-computer interface company Blackrock Neurotech.
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