Tether CEO dishes on impact of growing competition, 'decoupling' from crypto, and commodities market

Growing competition across the stablecoin market is not only a positive, argues Tether CEO Paolo Ardoino, it's also a product of USDT -0.26% 's success.

"They are seeing, of course, how much money we are making. So it's normal that everyone will try to get a portion of it,” he told The Block in a recent interview. "The fact that there are new products is great for multiple reasons. First of all, it creates more resiliency, it creates alternatives."

With a market capitalization of over $114 billion, Tether's USDT is the world's third-largest cryptocurrency. As the market's largest U.S. dollar-pegged stablecoin, it far surpasses Circle's USDC's market cap of $34 billion. Several other dollar-pegged stablecoins are also trying to get their share of the market, including one recently issued by the long-time Silicon Valley fintech PayPal. And more appear on the way with Ripple announcing a stablecoin earlier this year. State Street is also considering launching one, according to a recent report .

Ardoino said he welcomes the added competition even if it eventually affects Tether's bottom line.

"More competition will make the entire stablecoin industry much more solid," he said. "We might eventually make less money, but I believe that we have a good chance to lead the space for a long time because we understand it better than anyone."

The Tether CEO also views his company's priorities as different from those of its rivals. "I see our competition always focusing on banking and institutions, and I believe that the world is made up of 7 to 8 billion people, of which 5 billion people need our services, and we understand that much better."

Aware that his comments might be met with cynicism, Ardoino maintained that adding users in emerging and developing nations is more important than increasing USDT's market capitalization.

While traditionally stablecoin trading volumes have closely followed the overall cryptocurrency market, Ardoino told The Block he sees indications that USDT is gradually "decoupling" from other digital assets.

"Over time, it's decoupling from the pure crypto industry," he said. "I would consider today, USDT more like a digital dollar, not even a cryptocurrency anymore."

Revolutionize commodities?

Ardoino pointed to the fact that USDT daily trading volumes often exceed those of bitcoin and ether combined. He views the company's token evolving into "a global payment system" increasingly favored by nations that produce raw materials while simultaneously battling high inflation.

"We are seeing USDT being used for purchasing cotton, purchasing also gold," he said. "It’s a nascent interest, but we are getting a lot of questions about how USDT could revolutionize and help the commodities industry.”

Ardoino cited Turkey, Argentina and Brazil as demonstrating a growing interest in using USDT to purchase raw materials. High inflation has traditionally been an ongoing issue for each of the three countries.

In a recent report , Bloomberg said that unsanctioned Russian firms had been using USDT and other cryptocurrencies "to settle some of their cross-border transactions with mostly Chinese clients and suppliers." Sanctioned countries have, in the past, turned to cryptocurrencies to settle payments. After facing criticism that nefarious actors have used Tether's stablecoin, the company announced efforts to prevent unsavory individuals from employing USDT.

"The reality is that it would be very, very stupid for anyone that is on a sanctioned list to use USDT," said Ardoino. "The usage of USDT … from bad actors is microscopic, but of course, it makes the news."