Tether Holdings Ltd., the company behind the USDT stablecoin, is exploring new avenues to deploy its substantial profits, including potential lending to commodities traders. According to sources familiar with the matter, Tether has initiated discussions with several firms in the commodities sector regarding USD lending opportunities.

This move could disrupt a market that has long relied on traditional banks for credit facilities.

Tether Aims to Revolutionize Commodity Trading with USD Lending

Tether Holdings Ltd has reportedly engaged in talks with multiple commodity trading firms about potential US dollar lending arrangements. This development is particularly significant as smaller commodity traders often depend on credit lines to finance the global movement of oil, metals, and food. However, recent market shifts and tighter credit conditions have made it increasingly challenging for these companies to secure financing.

The adoption of USDT has already gained traction in countries like Venezuela and Russia as a means to circumvent US dollar transactions due to sanctions. Tether’s successful entry into commodity lending would further expand the stablecoin’s reach beyond crypto markets and into more traditional financial sectors.

The recent increase in stablecoin supply on the TON Blockchain underscores the growing importance of stablecoins in enhancing liquidity and network utilization.

Credit lines serve as a vital lifeline for commodity traders shipping millions of dollars worth of goods across the globe. While major traders like Trafigura Group maintain extensive credit networks, smaller players often struggle to secure the necessary funding to sustain their operations.

Tether’s proposition is unique in that it could provide funding without the stringent regulatory requirements imposed on conventional lenders. This approach could lead to faster settlements and reduced friction in trade, making it highly attractive to traders seeking quick access to capital.

Tether’s Ardoino Explores New Market Opportunities

Private credit has been gaining momentum in commodity trade finance, and Tether claims to possess the capital required to enter this sector. The company’s latest financial attestation, published in July, reported $5.2 billion in profits for the first half of 2024.

Tether CEO Paolo Ardoino recently acknowledged that the company is investigating opportunities in the commodities space, emphasizing that these discussions are still in their early stages.

While Ardoino did not disclose specific investment amounts for commodity trading, he noted that the strategy is currently in a “trial period.” He expressed interest in exploring various commodity trading avenues, suggesting significant growth potential in this area.

The importance of stablecoins is further highlighted by recent developments in the Ripple Labs case. Ripple is actively advancing its stablecoin initiatives, having recently minted millions of Ripple USD (RLUSD) tokens as part of its ongoing development and testing efforts. This move reflects a broader trend among blockchain companies to integrate stablecoin solutions into their ecosystems.

Targeting Post-War Commodity Trade

The commodity trading industry is recovering from a tumultuous period characterized by extreme price volatility following Russia’s invasion of Ukraine. While this initially caused liquidity challenges, it ultimately led to record profits for many traders.

The conflict has underscored the sector’s reliance on the US dollar, enabling the government to impose sanctions on natural resource exports. Consequently, there has been increased interest in alternative financing methods and the use of stablecoins for trade transactions.

To capitalize on these trends, Tether has established a dedicated team focused on developing trade finance opportunities.

Tether Investments, the firm’s investment division, evaluates numerous proposals monthly, concentrating on sectors such as alternative financial infrastructure for emerging markets, artificial intelligence, and biotechnology.