Tether, the issuer of the world’s largest stablecoin USDT, is reportedly considering lending to commodity trading firms as a way to deploy its growing profits. According to a Bloomberg report, Tether has discussed US dollar-denominated lending opportunities with several commodity trading companies.
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Tether is exploring lending to commodities trading companies as it looks at ways to deploy its billions of dollars in profits, a move that could shake up an industry typically reliant on traditional banks for credit.https://t.co/meLCi4Eeg6
The move comes as Tether looks to find ways to utilize the billions of dollars in profits it has generated. In July, the company announced record-breaking profits of $5.2 billion in the first half of 2024, along with a larger-than-ever stockpile of US government bonds.
Commodity traders rely heavily on credit to finance international shipments of raw materials like oil and precious metals. Firms that specialize in commodities derivatives, such as futures and swaps, also require credit to fund their trading activities. With the growing popularity of cryptocurrency-based futures contracts, Tether sees an opportunity to potentially play a role in this market.
The potential lending to commodity traders is part of Tether’s broader strategy to reinvest its profits in adjacent industries. The company has said it is exploring opportunities in sustainable energy, Bitcoin mining, data infrastructure, artificial intelligence, and other sectors.
By lending to commodity traders, Tether could not only deploy its substantial cash reserves but also potentially benefit from the lucrative credit needs of this market. However, the move also carries risks, as the commodity trading industry has faced its share of volatility and high-profile blowups in recent years.