Tether’s CEO, Paolo Ardoino, recently projected that the company's liquidity pool, dedicated to financing raw materials transactions, could grow to between $3 billion and $5 billion by 2026.
Tether’s CEO, Paolo Ardoino, recently projected that the company's liquidity pool, dedicated to financing raw materials transactions, could grow to between $3 billion and $5 billion by 2026. The company has expanded its business operations into commodities lending, which follows Tether’s broader strategy to support the $10 trillion trade finance industry. This division, known as Tether Investments, was created to operate separately from Tether's main business of issuing USDT, with profits from the stablecoin used to fund investments.
Tether’s expansion into commodities was highlighted in October when the company financed a $45 million oil trade. The trade involved the transport of 670,000 barrels of Middle Eastern crude oil. Ardoino explained that Tether is working with large commodities traders, although he declined to name them for privacy reasons. The company plans to lend capital to these brokers, earning interest on temporary financing provided. Ardoino emphasized that the commodities sector is always in need of liquidity, making it a fitting area for Tether to enter.
Tether's stablecoin, USDT, is especially popular in emerging markets, where commodities like oil, natural gas, and gold are critical to economic activity. Ardoino noted that the use of USDT in commodities trading brings benefits like increased transparency and faster transaction speeds. This move into commodities reflects Tether’s broader plan to diversify into traditional financial markets, tapping into the global trade sector.
As part of its growth, Tether Investments intends to invest more than $1 billion over the next 12 months, as previously mentioned by Ardoino in an interview. Tether reported a $7.7 billion profit for the first nine months of 2024, further fueling its expansion. The company has been able to use profits from the issuance of USDT to fund its commodities ventures. Ardoino added that the commodities market is key to Tether’s strategy, especially as the company looks to increase the liquidity pool that is expected to reach between $3 billion and $5 billion by 2026.
Tether’s involvement in the commodities market marks a significant step as cryptocurrency firms increasingly look to diversify into traditional finance sectors. With its established presence in the digital currency space and growing influence in the commodities sector, Tether is positioning itself as a key player in the global financial system. The company’s liquidity pool expansion represents a critical move to further integrate its stablecoin into global trade, where it can serve both as a financing tool and as a more transparent and efficient means of conducting commodity transactions.
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