While much of the crypto world crashed and burned during the recent market downturn, reeling from the collapse of FTX and other giants, Tether has thrived.
The market capitalization of its stablecoin, USDT, ballooned to $111 billion—triple that of its nearest rival, USDC, issued by Boston-based Circle. Thanks to higher interest rates on U.S. Treasurys, which form the bulk of the reserves backing its digital stablecoins, Tether is in an enviable position because its source of capital is effectively free. Unlike traditional banks, customers who deposit hard currency with Tether in exchange for the tokens earn no interest.
For the first quarter of 2024 alone, Tether reported unaudited company-wide “financial results” of $4.5 billion and a net equity of $11.4 billion. In 2023 it reported a net profit of $6.2 billion, likely making it the most profitable company in crypto today. Coinbase, the largest U.S. crypto exchange, earned $95 million on $3.1 billion in revenue in all of 2023 and for the first quarter of 2024 it had a net income of $1.2 billion thanks largely to the rise in crypto prices. Approximately 20% of Coinbase’s 2023 profits were generated from the interest it received on the reserves backing stablecoin USDC thanks to a partnership with Circle.
Flush with capital, Tether is now looking beyond stablecoins for growth. Last month, the company, headquartered in the British Virgin Islands, announced a strategic restructuring, branching into three new divisions beyond stablecoins: bitcoin mining, artificial intelligence, and education.
“There is this concept of removing intermediaries in crypto that can be applied to many other things,” says Tether’s new chief executive Paolo Ardoino, who had served as its chief technology officer and spokesperson since 2017.
Tether’s planned expansion isn’t just a matter of prudent diversification–it’s philosophical. “We feel like 90% of technologies, if not more, are built for the best case scenario but no one is building the tech for the worst case scenario,” says Ardoino, 40. “If there is a catastrophe, I’m not saying that there has to be a huge war, but anything can happen, and we are not prepared for that.”
Crypto historians will recall that bitcoin was created by Satoshi Nakamoto in response to the 2008 financial crisis, a time when there was widespread doubt over the stability and trustworthiness of existing global financial systems. Ardoino believes Tether will play a big role in creating what he describes as sovereign technologies that can empower people.
Says Ardoino “It’s good to have resilient money, but if you only have resilient money and everything else is centralized, it can be destroyed quickly. One of our mottos is ‘build for the apocalypse’.”
Read more:
https://forbes.com/sites/ninabambysheva/2024/05/09/crypto-giant-tethers-new-ceo/
