Tether is interested in exploring different commodity trading possibilities.
Stablecoin USDT issuer Tether Holdings is considering lending to commodities trading firms, and the explorations are “in early stages.”
Tether CEO Paolo Ardoino confirmed with Bloomberg that the company is already in talks with several firms, discussing US dollar lending opportunities.
“We likely are not going to disclose how much we intend to invest in commodity trading. We are still defining the strategy.”
Opportunities are “massive in the future,” as Ardoino emphasized, and Tether is eager to investigate various options for trading commodities.
Although their place in the commodities trading market is still developing, cryptocurrencies have the power to completely transform it. They offer increased efficiency, security, and transparency.
In the financing of the commodities trade, major players have access to vast credit networks, while small businesses frequently face difficulties in obtaining funding. Giant traders such as Trafigura Group, for example, have access to a vast network of credit, with $77 billion in credit lines with roughly 150 institutions.
Those with knowledge of the situation claim that Tether’s plan intends to simplify and expedite trades and payments. This might avoid being subject to the same strict regulations as conventional lenders.
Tether Explores New Horizons
Tether noted that it has the capital required to participate. The company reported a massive $5.2 billion profit in the first half of 2024.
Additionally, the native stablecoin USDT has experienced incredible growth and continues to hold a leading position in the stablecoin market. The market valuation of USDT is getting close to $120 billion, which would be a new record high for the token.
Additionally, the stablecoin is becoming more popular for cross-border transactions in Venezuela and Russia. At least two major Russian metals producers have reportedly resorted to using USDT to settle customer transactions, according to a Bloomberg report.
Following Russia’s invasion of Ukraine, the commodities trading industry experienced a decline characterized by significant price volatility. Despite creating a strain on the sector’s liquidity, it also produced record profits.
The conflict also brought attention to the industry’s reliance on US dollars, which gave the US government the authority to impose sanctions. The use of unregulated financing techniques, like trading stablecoins, increased as a result.
To leverage the growing trend and demand, Tether has assembled a group to explore trade finance options.
Further, Tether is also working on expanding its artificial intelligence (AI) focus, as announced by the firm in March.