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    Tether mulls lending to commodity traders: Report

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    Tether Holdings, the creator of USDT stablecoin, is contemplating lending funds to commodity trading firms according to Bloomberg sources. This strategy has arisen from the firm’s high profits, with Tether earning $5.2 billion in H1 2024 alone. Tether’s potential move into the commodity sector comes off impressive profits and investments in multiple industries like sustainable energy and AI infrastructure. The company’s current market value sits at around $120 billion. Further details about these potential commodity trading industry investments have not yet been revealed.

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    Tether Holdings Ltd, the company behind the stablecoin USDT, is considering giving out loans to companies that trade in commodities, according to a recent Bloomberg report from October 14. This is a way for them to put their huge profits to work.

    Several unnamed sources told Bloomberg that Tether, which is responsible for producing new units of USDT, has had talks with a few commodity trading companies to discuss lending them money in US dollars. There’s no word yet from Tether in response to these reports.

    Looking back, Tether managed to earn a killer $5.2 billion in the first six months of 2024. This record-breaking profit was also confirmed in a recent discussion, where Tether shared its plans to explore how USDT could get involved in regular commodity trading deals.

    Now, if you’re into the business of trading commodities like oil and precious metals, you know how much credit is needed to fund the international shipping of these items. And if you’re backing derivatives like futures or swaps, you also need some credit to help finance these operations. Speaking of which, futures related to crypto prices are becoming a hot trend.

    In case you’re getting lost, futures contracts are like an agreement for you to buy or sell something later. This is an important tool for institutional investors to protect themselves from price fluctuations. Moreover, traders love futures because they can amplify their bets with borrowed money or leverage.

    As of September, about $290 billion is parked with brokerage companies that cater to futures and options trading. This is based on a report by the US Commodities Futures Trading Commission (CFTC).

    Interestingly, futures positions are typically funded mostly with leverage, and traders only need to put up a part of the contract’s value as collateral, another term for a security deposit.

    Jumping back to Tether, the company posted in a July 31 announcement that they made record-breaking profits of $5.2 billion for the first half of 2024. They cited the growth of the USDT stablecoin, which Tether says matches one for one with liquid assets in US dollars. All these figures were confirmed by BDO, a third-party accounting firm.

    By October 14, the total value of USDT in the market was around $120 billion, based on data from CoinMarketCap. Besides, Tether has been investing some of its profits in other industries like sustainable energy, Bitcoin mining, data, AI infrastructure, P2P communication tech, neurotech, and education.

    Tether’s CEO, Paolo Ardoino, revealed in an interview with Bloomberg that the company is sniffing out potential deals in commodities. Even though things are still at a preliminary stage, the CEO didn’t disclose how much they plan to invest in the commodity trading industry.

    Source: Cointelegraph

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