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- Credit lines are a lifeline for smaller commodity dealers.
- It is difficult for smaller companies to get the capital they need to stay in operation.
In its pursuit of methods to use its substantial earnings, Tether Holdings Ltd., the corporation responsible for the USDT stablecoin, is contemplating financing to commodities traders. The corporation has reportedly approached many commodities businesses about US-dollar lending, according to sources familiar with the situation.
A market that has relied on loans from legacy banks since the beginning of time might be thrown into chaos by this. Several commodities trading businesses and Tether Holdings Ltd have allegedly discussed the possibility of US dollar lending. Credit lines are a lifeline for smaller commodity dealers that rely on them to finance the international transportation of food, metals, and oil. Still, in the face of changing markets and stricter lending, such businesses found it harder to secure finance.
Faster Settlements and Fewer Trade Frictions
As a result of sanctions, businesses in nations like Russia and Venezuela have begun using USDT instead of the US currency. The stablecoin’s distribution outside of crypto markets and into more traditional financial areas will be accelerated by the company’s successful endeavors.
Stablecoins are becoming more important for improving liquidity and network utilization, as the recent spike in supply on the TON Blockchain has shown.
Trades in commodities, such as food, metals, and oil, can’t happen without access to credit lines. Trade behemoths like Trafigura Group maintain a vast credit network. Roughly 150 financial institutions have extended credit lines totaling $77 billion to Trafigura. It may be especially difficult for smaller companies to get the capital they need to stay in operation.
Actually, it is what sets Tether’s proposal apart from the competition; it would provide money without the burdensome regulatory hurdles that traditional lenders face. This would be very attractive to traders seeking speed and easy access to cash since it would likely lead to faster settlements and fewer trade frictions.
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