Stablecoin issuer Tether is significantly expanding its presence in commodity lending, with billions of dollars already deployed in the sector, according to CEO Paolo Ardoino.
In an interview with Bloomberg, Ardoino stated that Tether has extended approximately $1.5 billion in credit to commodities traders thus far, providing financing in both fiat currency and its USDt stablecoin. The company is actively targeting traditional commodity trades, encompassing agricultural products and oil, and intends to further increase its exposure. "We are going to expand dramatically," Ardoino remarked.
This lending activity is part of Tether’s recently established Trade Finance unit, a business line typically focused on short-term credit to facilitate the global movement of goods through supply chains. Within the commodities market, trade finance commonly provides the necessary funding for traders to purchase, transport, and deliver cargoes.
Bloomberg noted that some companies might exhibit hesitation in borrowing in USDt compared to traditional dollars. However, this reluctance could potentially be offset by Tether’s growing financial influence. With nearly $184 billion worth of USDt currently in circulation, Tether ranks among the most profitable companies globally on a per-employee basis.
Tether's strategic move into commodities builds upon its existing involvement in the sector. Its tokenized gold product, Tether Gold, has experienced substantial growth alongside the rally in bullion prices. Ardoino recently confirmed that the company holds over 100 tons of physical gold.
The Stablecoin Engine Driving Tether’s Diversification
Tether's rapid diversification into new business ventures is fundamentally driven by the success of its stablecoin operations. USDt was initially developed to provide crypto traders with a dollar-linked asset during a period when the industry faced significant challenges in accessing traditional banking services.
Since its inception, stablecoins have evolved into a widely adopted financial instrument used for remittances, cross-border payments, and on-chain settlement. Their appeal lies in their speed, cost-effectiveness, and continuous transferability. This growth has propelled Tether into becoming one of the highest-earning entities within the digital asset industry, thereby enabling the company to expand into areas such as trade finance, commodities, artificial intelligence, and other emerging ventures.
Major financial institutions have also begun to explore stablecoin technology in various capacities. JPMorgan continues to broaden the application of its blockchain-based JPM Coin for institutional payments, while Citigroup has launched pilot programs for tokenized deposits and settlements.
Payments giant Visa has recently enhanced its stablecoin settlement capabilities, allowing select businesses to receive payouts in USDC through a new pilot program.