Tether looking to diversify into commodities trading, other TradFi ventures

After reporting a record-breaking profit of $5.2 billion in the first half, Tether explores inefficiencies in credit for the commodity market.

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Tether Holdings, the issuer of the USDT stablecoin, is looking to expand beyond the crypto industry and explore new ventures in traditional finance (TradFi), including potentially lending to commodities trading firms, Bloomberg News reported on Oct. 14, citing CEO Paolo Ardoino.

People familiar with the matter told Bloomberg News that Tether is already in discussions focused on lending US dollars to commodity traders, a sector where access to credit is critical to sustaining the flow of multimillion-dollar shipments of oil, metals, and agricultural products.

Ardoino confirmed the rumors during an interview with Bloomberg but did not disclose further details about the plans or the amount the firm intends to invest in them. However, he clarified that these explorations will remain distinct from the firm’s core stablecoin business.

While major players like Trafigura Group enjoy extensive access to credit lines — reportedly $77 billion from 150 institutions — smaller traders often struggle to secure funding. Tether’s alternative approach could prove attractive, as its loans are not subject to the regulatory conditions traditional lenders face, potentially speeding up transactions.

According to the sources, the company is looking at ways to expand USDT’s use in mainstream commodity trades globally, leveraging the liquidity and stability it offers, the report said.

Exploring new fronts

Tether reported $5.2 billion in profits for the first half of 2024, most of it related to the firm’s investments in traditional assets, such as US Treasuries, totaling $97.6 billion. The firm’s exposure to US Treasuries surpasses major nation-states, including Germany, the UAE, and Australia.

The firm has seen remarkable growth and maintains a dominant position in the stablecoin sector, with USDT approaching a $120 billion market capitalization, which will be a new all-time high for the stablecoin.

The recent foray is the latest in Tether’s efforts to channel its significant growth into new ventures.

Tether has been working on expanding to new sectors for several months now, starting with an expanded focus on artificial intelligence (AI) announced in March.

A month later, in April, Tether created four new business divisions focused on data, finance, power, and education. Following that, the firm made its first investment in neuroscience less than two weeks later by acquiring a stake in the brain-computer-interface company Blackrock Neurotech.

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