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Tether, the company behind the world's largest stablecoin USDT, is reportedly in talks with commodity trading firms about lending out billions of dollars in profits.
Tether has begun talks with several companies in the credit-hungry commodities trading sector and is exploring U.S. dollar lending opportunities, according to people familiar with the matter. Tether is also discussing how its stablecoin could be used in mainstream commodities trading, the people said, speaking on condition of anonymity because of the private nature of the talks. The USDT stablecoin has become a tool for traders and producers in countries like Venezuela and Russia to bypass the U.S. dollar amid sweeping sanctions.
Credit lines are vital to commodity trading firms, allowing them to finance millions of dollars’ worth of oil, metals and food shipments around the world. While large industry firms like Trafigura Group have access to extensive credit networks (Trafigura alone had $77 billion in credit lines with about 150 institutions as of March), smaller firms often face challenges securing the funds needed to keep their operations running smoothly.
Tether’s proposition is particularly attractive because it is not subject to the same strict regulatory requirements imposed on traditional banks and potentially allows for faster payments and trade settlements. Some experts suggest this flexibility could be a game-changer for smaller and mid-sized commodities trading firms.
Private credit is increasingly entering the commodities trade finance space, and Tether has positioned itself as a significant investor. The company claims to have the capital needed for such initiatives, although it does not provide audited financial results. In its most recent financial filing, published in July, Tether reported $5.2 billion in profit for the first half of 2024.
Tether CEO Paolo Ardoino confirmed the company’s interest in commodity finance in an interview with Bloomberg News, noting that the research was still in its “early stages.” “We probably won’t disclose how much we plan to invest in commodity trading. We’re still defining the strategy,” Ardoino said.
Ardoino also outlined Tether’s ambitions, saying, “We are interested in exploring different commodity trading opportunities,” and expressed confidence that the opportunities could be “very large in the future.”
*This is not investment advice.