WIRED: This year, Tether has diversified its business model by moving into venture capital. Please tell me the basis for that.
Ardoino: Thanks to rising interest rates, Tether has become very profitable over the past two years. When Tether started, you could earn 0.2% on your reserves, and now you can earn 5.5%. Of course, it may be time-limited – we’re also hearing about the possibility of rate cuts – but it’s very difficult to go back to a 0.2% scenario even with 3-4% inflation.
Over the past 24 months, Tether has generated approximately $11.9 billion in profits. With this amount, they could have distributed the entire amount to shareholders and made everyone happy. Instead, some of it is added to reserves to further back the stablecoin, and the rest is essentially kept in the investment arm.
What is the theme of your venture investment?It seems like you are looking beyond the cryptocurrency industry.
We come from Bitcoin and are die-hard Bitcoiners. Perhaps we are not perfect as humans, but we try to carry the spirit of Bitcoin in terms of economic freedom, freedom of speech, and freedom of access to technology in every venture we invest in.
The concept of decentralization can be applied to various fields such as artificial intelligence. We are already seeing how AI is becoming highly politicized. We believe that having players independent from traditional actors such as Amazon, Microsoft, and Google will be very important.
The same is true for another important technology: brain-computer interfaces (BCI). This will be the basis for the future. It will be critical to build brain-computer interfaces that respect people’s privacy and ensure that their data remains local and not collected by the same companies that run social media platforms.
We’re not your typical VC. We don’t invest in companies just to find a unicorn who can multiply us 100x. Of course that’s great, but it has to match our vision. Interdependence, resilience, disintermediation – these terms are very important to us.
How much capital does Tether plan to put into venture investments?
We always prioritize stablecoin businesses because risk management is very important. At the moment, there is ample buffer on top of reserves, but if USDT continues to expand, it will also expand proportionately.
But for almost everything else, more than 90% of the profits Tether generates, we strive to reinvest them into things that are important to us and our community. There is no need to hand out large amounts of money as dividends.
Some venture capitalists have poorly evaluated the character of crypto founders, and some, like Sam Bankman Fried, were later convicted of fraud. What are you going to do to ensure Tether doesn’t make the same mistake?
The only way to save your invested capital is to investigate all the difficulties and perform the deepest level of due diligence. Not every investment is perfect, but we approach every company with all our heart and mind to ensure the best possible results.
