Tether could grant loans to commodity trading companies

Tether, the crypto company behind the largest stablecoin USDT, is considering the opportunity to grant loans in commodity trading. 

Tether (USDT) and the opportunity to grant loans in commodity trading

According to what reported, it seems that Tether, the company behind USDT, is considering the opportunity to grant loans to commodity trading companies.

In practice, the issuer of the largest stablecoin needs a way to deploy its billions of dollars in profits. If the choice fell on trading commodities, companies could benefit from a wider credit. 

At the moment, the issue does not seem to be official. In fact, the CEO of Tether, Paolo Ardoino, reportedly told Bloomberg that it is an exploration of opportunities in the sector, emphasizing that it is still “in the early stages.”

“We will probably not reveal how much we intend to invest in commodity trading. We are still defining the strategy”

What is known, however, is that there is interest and that Tether has discussed this opportunity with several commodity trading companies. 

In the meantime, at the time of writing, the market cap of USDT is 119.7 billion dollars, a step away from the next target of 120 billion dollars. 

Tether and loans to commodity trading: “there will be no impact on stablecoin reserves”

Delving a bit deeper into the matter, Ardoino said to The Block as follows:

“Tether is exploring various trading opportunities in commodities and TradeFi. This line of business will not impact the reserves of stablecoins, as it will be conducted through the Tether Investment vehicle which is separate.”

This means that, despite Tether needing to deploy its billions of dollars in profits, these do not come from the stablecoin reserves. 

In fact, Ardoino emphasized that if he were to evaluate the opportunity of loans in commodity trading, this will happen through Tether Investment. 

In any case, Tether continues to expand through its investments. Last month, in fact, Tether made its first investment of 100 million dollars in the agricultural and food sector. This involves the purchase of a 9.8% stake in the Latin American giant Adecoagro.

Immediately after, aiming for financial inclusion, Tether invested 1.5 million dollars in Sorted Wallet to make the crypto sector more accessible in Africa and South Asia.

The ten years of USDT and its questionable compliance with MiCA

Just last week, USDT celebrated 10 years of existence, exactly on October 6th.

While on one hand there is celebration, on the other hand there is concern for the main stablecoin that might not comply with the European Union’s crypto regulation, the MiCA. 

In fact, from June to December of this year, crypto companies have time to comply with the new MiCA rules, but it seems that the stablecoin may encounter difficulties. 

In practice, the MiCA recognizes as true fiat-collateralized stablecoins only those issued by entities that are officially and legally recognized as authorized issuers of e-money, that is, digital fiat money. 

As of today, the crypto company Tether is not yet recognized by the EU as an e-money issuer. 

In this regard, Ardoino has announced that he is working on a solution that will be ready in November, just a month before the fateful December 30th. In fact, if the MiCA decides not to confirm Tether’s compliance, USDT could be delisted from all exchanges for users residing in EU countries.