- After a record profit of $5.2B in H1 2024, Tether is expanding into commodities lending, challenging traditional banks.
- Tether’s quicker, less regulated credit options attract credit-strapped traders, especially smaller firms.
- Venezuela and Russia are already using $USDT in commodities trading to evade sanctions.
$USDT leads stablecoins, with a global market of $165B and fiat-backed stablecoins at nearly $160B, a record high.
Tether’s market cap is over $120B, a 40% increase within a year alongside a hefty $5.2B profit in the first half of 2024.
Tether is planning to utilize some of this cash to offer loans to commodities traders.
Let’s look at Tether’s strategy for entering the commodities trading market and its potential implications for crypto use.
Tether Takes On Traditional Lenders
Tether Holdings Ltd, the issuer of the largest stablecoin $USDT, is exploring lending opportunities in the commodities sector.
The company recently attended industry events in Switzerland and London to discuss expansion into commodities finance.
Commodities, from oil to gold, are globally traded and often require significant financing.
The financing process has its challenges:
- Low margins
- Goods typically traded across borders
- Low trust between involved parties
Transporting commodities globally entails regulatory challenges and risks that financiers acknowledge.
Consequently, large companies often have better access to financing while smaller firms face difficulties.
$USDT Provides a USD Alternative
Tether’s offerings are less regulated than banks, giving traders speed and flexibility.
Tether’s CEO believes the sector has strong future potential.
After scandals in the commodities finance industry, Tether may find new opportunities to take advantage of.
Countries under US sanctions can use $USDT as an alternative method for international transactions.
Venezuela’s state-owned oil company turned to $USDT to get around frozen accounts.
Similarly, many Russian metals producers are reportedly using $USDT to conduct trades with China.
Summary: Commodities Demonstrate Crypto’s Appeal
Looking to the future, Tether’s investment strategies indicate a focus on alternative finance solutions for emerging markets.
As the stablecoin sector expands, the adoption of $USDT showcases how crypto can serve as a powerful alternative to traditional finance.
References
- Crypto Company Tether Talking to Commodity Traders (Yahoo)
- Economies of Scale: What Are They and How Are They Used? (Investopedia)
- Why commodity-trading scandals are multiplying (The Economist)
- Venezuela Looks to USDT to Bypass Sanctions (CoinDesk)
- Crypto’s Role in Geopolitics: How Tether Aids Russia (Coinedition)
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