Tether’s commodities liquidity pool could hit $5 billion by 2026, says CEO

With billions of dollars of profit rolling in for the issuer of the popular stablecoin, USDT, Tether broadened its horizons by creating a separate investment arm committed to supporting the world of traditional finance.

After recently dabbling in commodities lending, Tether’s CEO Paolo Ardoino says the size of Tether Investment’s liquidity pool, set aside for financing transactions of raw materials, could grow to between $3 billion and $5 billion by 2026. In an interview with The Block this week, he said Tether Investments plans to lend capital to commodities brokers and earn interest on the temporary financing.

"It’s a way to provide partner liquidity to a sector that is always hungry for liquidity," Ardoino said, adding that Tether Investments is already working with some of the sector’s largest commodities traders. The Tether executive declined to name any trading firms due to privacy reasons.

"They are very interested in using USDT for commodity trading because it creates a higher level of transparency and speed," he said. In October, Tether financed a trade to "load and transport" 670,000 barrels of Middle Eastern crude oil, valued at approximately $45 million.

Tether has previously said Tether Investments was created to support the "$10 trillion trade finance industry." The investment division operates separately from Tether’s main business, funding investments with profits generated from the issuing of USDT, according to Ardoino.

Last month, Tether said that its nine-month profit total for this year had hit $7.7 billion. In June, Ardoino said  in an interview that Tether Investments planned to invest more than $1 billion over a 12-month period.

When asked about Tether’s interests in commodities, Ardoino said that as USDT is particularly popular among users in emerging markets and developing countries where commodities sales serve as key economic drivers, it makes sense to help facilitate trades. He also said that Tether is specifically interested in helping finance oil, natural gas and gold transactions.

"We are at the very, very start of this new opportunity," he added.