Tether Eyes Loans in the Commodity Trading Market

Tether Holdings Ltd, known for its stablecoin USDT is turning towards the commodities market by looking to lend in the sector.

Stablecoin issuer Tether is making a play for the commodities market, mulling loans to the sector as several commodity trading firms are discussing USD loans from the company, according to a Bloomberg report.

The move represents a shift in strategy for Tether, which is now looking to deploy its substantial profits—the company reported earnings of $5.2 billion in the first half of 2024—into other forms of currency.

As the world clamors for alternative financing methods, the operational shift could open up new revenue streams for Tether.

The commodities sector provides a bankable proposition for the company to invest its profits in, and Tether CEO Paolo Ardoino is optimistic that it can shake up the commodity trading world.

“We are in the early stages of investigating lending opportunities,” said Ardoino. “However, the company is yet to disclose precise figures and is looking to scale its involvement gradually.”

The news comes as some lenders have scaled back their exposure to commodity trade finance following scandals and high-profile collapses in recent years.

Tether is looking to fill this gap in the market by offering more flexible loan terms.

The commodities trading industry is also much healthier after rebounding from a challenging period of price volatility and liquidity shortfalls. It also disrupted supply chains and set off a commodity price surge, driven at least in part by Russia’s invasion of Ukraine.

This volatility introduced liquidity problems and created unheard-of profit potential for many trading firms.

Alternative financing to power the industry, one of Tether’s potential lending outlets, could stabilize the sector further.

Due to sanctions, USDT is already being used for cross-border transactions in Russia and Venezuela. This new financial pathway arises from the growing acceptance of stablecoins as a payment method in sanctioned regions.

Tether is now working with a team to develop trade finance solutions that leverage these trends.

To reach key contacts, Tether is putting its logo on its cars and increasing its exposure in the industry, with company executives attending big industry events such as LME Week.

As part of a broader diversification strategy, Tether Investments, the firm’s investment arm, is considering investment opportunities in biotechnology, AI, and alternative financial infrastructure.

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