Tether Holdings, the world’s largest issuer of stablecoin USDT, is considering financing options for commodity trading companies as it looks for new ways to distribute this year’s profits amid a broader market recovery. It is reported that there are.
The talks include potential US dollar financing opportunities with a range of companies in the commodity sector, which often struggle to access credit, Bloomberg said.
Tether explores new credit solutions for commodity companies
Commodity trading companies that rely heavily on lines of credit, such as Trafigura Group, have large networks of lenders, with $77 billion in lines of credit from about 150 institutions as of March, according to Bloomberg. . In contrast, small businesses often struggle to secure the financing they need to keep their operations running smoothly.
Tether’s proposal is particularly attractive because its funding mechanism is not encumbered by the regulatory requirements imposed by traditional banks. This potentially allows for faster payment processing and more efficient trade execution.
While private credit is starting to make inroads into commodity trade finance, Tether claims it has the necessary capital to enter the space. In its latest financial attestation two months ago, Tether reported a significant profit of $5.2 billion for the first half of 2024, demonstrating its financial strength and investment capabilities.
In an interview with Bloomberg News, Tether CEO Paolo Ardoino acknowledged that the company is actively exploring opportunities in the commodity space, but these discussions are still in the early stages. said. “We are interested in exploring different commodity trading possibilities.”
USDT used by Russian and Venezuelan companies
In the traditional model of commodity trade finance, banks typically provide traders with established credit lines for the acquisition and transportation of goods. This commercial activity involves liquid collateral and is therefore generally considered to be low risk.
But Bloomberg highlights that new entrants to the commodity finance space face challenges, especially in navigating an environment marked by high-profile failures and scandals.
The commodity trading sector has experienced major turmoil in recent years, particularly after Russia’s invasion of Ukraine, causing extreme price volatility and a liquidity crunch, highlighting the industry’s dependence on the US dollar.
This has reportedly led the US government to impose sanctions on natural resource exports and increased interest in alternative financing methods, including the use of stablecoins.
Interestingly, the report notes that at least two prominent metals producers in Russia have begun using Tether’s USDT for cross-border transactions, while Venezuela’s state-run oil company PDVSA has also begun using Stable to pay for oil shipments. This suggests that coins are used.
To help expand into trade finance, Bloomberg revealed that Tether has assembled a dedicated team to explore these opportunities. Tether executives attended major industry events such as the Commodity Finance Gathering in Geneva and LME Week in London, further demonstrating the company’s commitment to this new direction.
The 1D chart shows that the market capitalization of cryptocurrencies is surging towards $2.24 trillion. Source: TOTAL on TradingView.com
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