Tether Eyes Commodities Lending as it Looks to Deploy Billions in Profits from $USDT: Bloomberg

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As a researcher with extensive experience in the financial sector and a keen interest in digital currencies, I find Tether Holdings Ltd’s venture into commodities lending intriguing. The potential for disruption in the commodity trade finance sector is indeed significant, especially given the recent pullback of traditional lenders due to high-profile collapses and scandals.

As an analyst, I am sharing insights about Tether Holdings Ltd, a company that manages the world’s largest stablecoin, USDT. They are venturing beyond their current scope and delving into commodities trading by investigating lending opportunities within this sector. According to recent reports from Bloomberg News by Archie Hunter and Olga Kharif, Tether Holdings has been engaged in discussions with various commodities trading firms, considering USD lending as a potential method to utilize their substantial profits.

The report further explained that industries dealing with commodity trading, focusing on the transport of valuable goods such as oil, metals, and food, largely depend on credit facilities to run their operations. Established companies like Trafigura Group can easily tap into extensive financial networks for loans, but smaller firms frequently face difficulties in obtaining adequate credit to ensure continuous transportation. The possibility of Tether entering this sector could provide a crucial support system for these struggling firms, as its funding would not be burdened by the restrictive terms typically associated with traditional lenders.

According to a report by Bloomberg, Tether’s interest in the commodity sector stems from the substantial profits it has made recently, as evidenced by its $5.2 billion earnings for the first half of 2024. Paolo Ardoino, Tether’s CEO, confirmed to Bloomberg that the company is actively pursuing opportunities in the commodities market, although plans are still being formulated. Ardoino also mentioned that while the exact investment amount has not been disclosed, Tether sees great potential in this sector.

Bloomberg noted that Tether could potentially revolutionize commodity trade financing, as it has the potential to challenge banks, which have traditionally controlled this market by providing loans backed by liquid assets such as oil and precious metals. However, a series of high-profile failures and scandals in the banking sector lately have led some traditional lenders to retreat, paving the way for emerging players like Tether to enter the scene.

It appears that Tether’s stablecoin has found popularity, particularly in regions such as Russia and Venezuela. According to Bloomberg, it is being utilized for cross-border transactions during US sanctions. With a focus team developing trade finance opportunities and executives attending significant industry events like LME Week, Tether seems intent on establishing itself as a significant player in international commodity trade finance.

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2024-10-14 22:10