Stablecoin Giant Tether Eyes Commodities Market

In a strategic move, stablecoin issuer Tether has revealed plans to explore lending opportunities in the commodities trading sector, according to a Bloomberg report on Tuesday, which cited undisclosed individuals close to the matter.

This new venture comes on the heels of the company's record-breaking profits, with a staggering $5.2 billion in earnings for the first half of 2024 alone.

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The move is seen as a direct response to the challenges faced by smaller commodity trading firms, who often struggle to secure the necessary credit lines from traditional lenders. Tether's involvement could offer a lifeline, providing a less regulated and potentially more flexible funding option.

Paolo Ardoino, Tether's CEO, confirmed the company's interest in the commodity space, emphasizing that it's still in the early stages of exploration. While the exact amount of investment is yet to be disclosed, Ardoino expressed optimism about the potential for growth in this market, the report said.

Tether has been actively positioning itself for this new venture. The company has hired a specialized team to develop trade finance opportunities and has been making its presence felt in the industry. Tether executives attended two key industry events in September — a commodity finance industry gathering in Geneva and LME Week in London — showcasing the company's commitment to this new direction.

This new venture marks a significant departure from Tether's previous focus on the cryptocurrency market. The company has already gained a foothold in certain regions, such as Russia and Venezuela, where USDT is used to facilitate cross-border transactions amid US sanctions.

But why is Tether venturing into commodities?

The answer lies in the company's massive profits. With billions in reserves, Tether is looking for new ways to deploy its capital. The commodities market, with its vast array of assets and complex trading dynamics, presents a compelling opportunity. However, the move is not without risks.

Nevertheless, Tether's foray into commodities is a gamble that could reshape the landscape of global trade finance. If successful, it could solidify the company's position as a major player in the financial world, beyond the cryptocurrency sphere.

Earlier this month Tether marked it's 10th anniversary of the USDT stablecoin, with Ardoino noting that "Today hundreds of millions around the world are already using $USDt as their digital dollar, in their everyday life. And tens of millions of new wallets are added per quarter."