Tether Holdings Ltd, the company behind the world’s largest stablecoin, USDT, is expanding its horizons by exploring lending opportunities in the commodities trading sector. According to a report for Bloomberg News by Archie Hunter and Olga Kharif, the firm has been in talks with several commodities trading companies, considering US dollar lending as a new avenue to deploy its billions in profits.
The report went on to mention that the commodity trading industry, which revolves around the movement of high-value shipments like oil, metals, and food, heavily relies on credit lines to maintain operations. While larger players like Trafigura Group have access to vast networks of lenders, smaller trading firms often struggle to secure the necessary credit to keep shipments moving. Tether’s potential involvement in this space could offer a lifeline for these firms, as its funding wouldn’t be subject to the stringent conditions imposed on traditional lenders.
Per Bloomberg’s report, Tether’s interest in the commodity sector is fueled by the billions in profits it has generated recently. In its latest financial attestation, Tether reported $5.2 billion in earnings for the first half of 2024. Paolo Ardoino, Tether’s Chief Executive Officer, confirmed to Bloomberg that the company is actively exploring opportunities in the commodities space, though the strategy is still in its early stages. He added that while Tether has yet to disclose how much it intends to invest, the company sees significant potential in this market.
Bloomberg pointed out that the potential for Tether to disrupt commodity trade finance is significant. Banks have long dominated this sector, lending against highly liquid collateral like oil and metals. However, several high-profile collapses and scandals in recent years have caused some traditional lenders to pull back, creating opportunities for new players like Tether.
Tether’s stablecoin has apparently already gained traction in places like Russia and Venezuela, where Bloomberg says USDT is being used to settle cross-border transactions amid US sanctions. With a team now dedicated to developing trade finance opportunities and executives attending key industry events like LME Week, Tether seems to be positioning itself to become a key player in global commodity trade finance.
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