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The issuer of the stablecoin USDT, Tether Holdings, is contemplating lending to firms involved in commodities trading, with discussions currently in the “early stages.”
Tether’s CEO Paolo Ardoino confirmed to Bloomberg that the company is already engaging with multiple firms to explore lending opportunities in US dollars.
“We are unlikely to reveal the amount we plan to invest in commodity trading. We are still in the process of defining our strategy.”
Ardoino emphasized that the potential opportunities are “massive in the future,” and Tether is keen on investigating various avenues in commodity trading.
The involvement of cryptocurrencies in commodities trading is still developing, yet they hold the promise to transform the industry by offering enhanced transparency, security, and efficiency.
While major players benefit from extensive credit networks in commodities trade financing, smaller firms frequently face challenges in obtaining financing. For example, large traders like Trafigura Group possess a vast credit network, boasting $77 billion in credit lines with approximately 150 institutions.
Sources familiar with the situation indicate that Tether’s proposal seeks to simplify and accelerate payments and trades, potentially bypassing the stringent regulatory requirements faced by traditional lenders.
Tether Explores New Horizons
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Tether has indicated that it possesses the necessary capital to engage in this venture. The company reported a substantial profit of $5.2 billion in the first half of 2024.
Additionally, the native stablecoin USDT has experienced significant growth and consistently holds a leading position in the stablecoin market. USDT is nearing a market capitalization of $120 billion, marking a new all-time high for the token.
The stablecoin has also gained popularity in Russia and Venezuela for cross-border transactions. According to the Bloomberg report, at least two major Russian metals producers have started using USDT to settle transactions with their clients.
The commodities trading sector faced a downturn characterized by considerable price volatility following Russia’s invasion of Ukraine. While this situation strained liquidity across the industry, it also led to record profits.
The conflict underscored the sector’s reliance on the US dollar, allowing the US government to impose sanctions. Consequently, there has been a rise in unregulated financing methods, such as the use of stablecoins in trade transactions.
In response to the growing demand and trend, Tether has assembled a team to explore trade finance opportunities.
Moreover, Tether is also focusing on expanding its artificial intelligence (AI) initiatives, as announced by the company in March.
The post Tether Explores Lending Opportunities in the Commodities Trading Sector appeared first on Cryptonews.
