Tether (USDT-USD), a cryptocurrency pegged to the US dollar, has quietly but rapidly become a dominant force in the global financial ecosystem. This is more than just a stablecoin. It is now an essential tool in both formal and shadow markets. With about $190 billion in daily trading volume, the company is comparable in size to Visa and even surpassed BlackRock in profitability last year, despite having fewer than 100 employees. As The Wall Street Journal reports, Tether has grown into a “vital cog in the global financial system,” but it operates in a gray area that has raised eyebrows around the world.
How Tether evades sanctions and facilitates illegal activities
Tether’s success also comes with a dark side. According to the Wall Street Journal, Tether has found a niche market as “a kind of secret dollar” in countries cut off from the global financial system due to U.S. sanctions, such as Iran, Venezuela and Russia. For example, Russian oligarchs and sanctioned companies use Tether to covertly move funds overseas. This digital dollar will also facilitate payments for sanctioned goods and services. “We need a regulatory framework that doesn’t allow offshore dollar-backed stablecoin providers to play by different rules,” said Wally Adeyemo, deputy Treasury secretary, who has expressed concern that Tether’s operations could undermine U.S. sanctions. He emphasized his concerns.
Tether provides a lifeline to a hyperinflationary economy
Conversely, Tether is not just for criminals and sanctions-breakers. It’s a lifeline in an economy hit by hyperinflation. In Venezuela, for example, inflation once reached 2 million percent, wiping out bolivar savings. Enter Tether, “the digital dollar for every Venezuelan,” as Guillermo Goncalves, who runs peer-to-peer trading platform Eldorado, puts it. With over 150,000 users, El Dorado helps Venezuelans trade Tether directly and provides a way to protect their funds without the high fees of traditional money transfer services.
Russia embraces Tether amid economic isolation
Tether has skyrocketed in popularity in Russia following sanctions. It’s not just small traders. Large banks like Rosbank are currently using Tether to help customers circumvent the restrictions. As The Wall Street Journal points out, Tether is the go-to currency for Russia’s elite. Russian fixer Ekaterina Zhdanova facilitated large-scale Tether and ruble transactions and also coordinated cash plane pickups. The US Treasury Department later sanctioned her for moving cryptocurrencies on behalf of an oligarchy.
Tether invests in global financial infrastructure
Looking to the future, Tether is not sitting idle. The company invests in startups around the world and promotes Tether-based payment systems. Tether is widely used by Russian expatriates in Tbilisi, Georgia, where the company has already invested $25 million. the aim? Consolidating Tether’s role as a primary payment system, especially in economies that traditional finance has ignored.
double edged sword
Tether walks a tightrope between innovation and illegality. Everyone seems to need it, but no one seems to trust it. Whether you see Tether as a financial savior or a fraudulent currency depends largely on where you stand. But one thing is clear. That means Tether is here to stay.
