Tether, the issuer of the popular stablecoin is looking into lending opportunities with international commodities traders, particularly in developing markets.
With its strong profits and existing connections, Tether may find profitable chances in this area.
Tether plans to leverage the company’s global reach
Per Bloomberg, Tether is considering entering the commodities market. Over its ten years of operation, Tether experienced undeniable success, especially in developing economies.
Partnering with commodities traders could support Tether’s position, especially as competition in the stablecoin space increases.
Many businesses in this sector rely heavily on credit, which usually comes from traditional financial institutions, but this can be challenging due to rising U.S. sanctions.
For example, Russian metal producers have started using USDT to facilitate smoother international transactions.
Commodities producers from various countries often struggle to trade on their own terms because of strict credit requirements, even when their products are high quality.
Tether has substantial financial resources and is already popular and trusted in many of these regions, giving it a chance to act as a line of credit.
Benefits and risks
If Tether successfully moves into this area, it could reap huge rewards.
The commodities market is known for being lucrative, and Eric Balchunas, Bloomberg’s ETF expert also noted a growing connection between gold and crypto ETF markets over the past year.
Tether has already launched a real-world asset linked to gold and could expand into other commodities as well.
Balchunas pointed out that since the launch of Bitcoin ETFs, Bitcoin reached record highs five times while gold has hit record highs thirty times, even though gold has only seen $1.4 billion in net inflows compared to $19 billion for Bitcoin ETFs.
The business finds a way
Tether has also dabbled in commodity trading with Russian metals and Venezuelan oil, showing that some commodities are already intertwined with cryptocurrency.
Yet, there are huge risks involved. Commodities trading too can be vulnerable to fraud and failures, and Tether might seek higher profit margins than traditional lenders. These increased profit expectations could lead to greater risks.
Tether is keeping details about this plan under wraps, and CEO Paolo Ardoino mentioned that they are still in the “early stages” of defining their strategy.
He stated that they aren’t ready to disclose how much they plan to invest in commodity trading but believe there will be “massive” opportunities in the future.
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