Tether Acquires 9.8% Stake in Latin American Agricultural Leader

Tether has acquired a 9.8% stake in Adecoagro, Latin America’s major player in the agricultural sector, for $100 million, as revealed in a new filing with the U.S. Securities and Exchage Commission (SEC).

Adecoagro manages over 193,000 hectares in Brazil, focusing on sugar and ethanol production.

According to the filing, Tether used funds from its own working capital for the purchase, now holding over 10 million shares of Adecoagro. The acquisition positions Tether as Adecoagro’s third-largest shareholder.

A Curious Buy

Adecoagro, listed on the Nasdaq under the ticker AGRO, originally focused on dairy farming. Since 2005, the company has expanded into various sectors, including sugar, ethanol, and renewable energy. It also engages in planting soybeans and corn in Argentina and Uruguay.

The move marks Tether’s first foray into the agriculture and food sector. While it’s quite different from Tether’s previous investment tastes, it’s still part of the company’s broad strategy to diversify its investment portfolio.

“Tether views land as a crucial asset class, complementing its existing investments in Bitcoin and gold. Land is inherently scarce, provides long-term yield, and has historically served as a safe haven during periods of geopolitical instability,” a spokesperson from Tether stated.

Tether has been widely known for its investments in emerging technologies, such as crypto mining operations, peer-to-peer platforms, and artificial intelligence (AI).

Tether’s venture capital arm has already contributed around $2 billion to AI and alternative financial infrastructures over the past two years. The company views AI as a transformative technology that can enhance operational efficiency and create new business opportunities across various sectors, including healthcare and finance.

The company is also known for its investment in Bitcoin. As of early 2024, Tether’s Bitcoin holdings approached 80,000 BTC, worth over $5 billion at current prices.

Dominance in the Stablecoin Market

Tether continues to lead the stablecoin market through its flagship product USDT. As of September 8, 2024, USDT’s market cap has surpassed $118 billion, CoinGecko’s data shows.

Tether has been proactive in expanding USDT across multiple blockchains, including Ethereum, Tron, and Polygon, among others. The company recently announced the deployment of USDT onto the Aptos network, aiming to enhance its presence and to make digital currencies more accessible and user-friendly globally.

Amid growing competition in the stablecoin market, particularly with the upcoming launch of Ripple’s stablecoin RLUSD, Tether is planning to debut a new stablecoin pegged to the United Arab Emirates Dirham (AED), in collaboration with UAE-based firms.

With the new UAE-pegged Dirham-pegged stablecoin, Tether aims to facilitate international trade and remittances, reduce transaction fees, and provide a hedge against currency fluctuations among businesses and individuals in the UAE.

Tether also seeks to be a pioneer in the UAE’s crypto market by seeking licensing under the UAE Central Bank’s Payment Token Services Regulation, a newly established regulatory framework overseeing digital asset transactions.

Push Into gold

Earlier in June, Tether announced its new line of digital assets backed by gold, called Alloy by Tether. The company also introduced the first token in the lineup, a gold-backed synthetic dollar known as aUSDT.

According to Tether, the product combines the stability of the U.S. dollar with the value-preserving characteristics of gold, offering users a reliable store of value. Alloy by Tether is built on the Ethereum blockchain, allowing for seamless integration with decentralized finance (DeFi) platforms.

aUSDT is backed by Tether Gold (XAUT) and utilizes overcollateralization and auditable smart contracts to ensure transparency and security. The structure allows for a reduction of volatility typically associated with cryptocurrencies.

Despite the innovative concept, the reception has been lukewarm. Reports show that only a handful of wallets have engaged with aUSDT since its launch, with minimal trading volume observed. As of late July 2024, only $34 worth of aUSDT had moved in a 24-hour period.