Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesCopyBotsEarn
Tether to start lending commodity traders as it seeks to deploy profits

Tether to start lending commodity traders as it seeks to deploy profits

CryptopolitanCryptopolitan2024/10/14 21:42
By:By Jai Hamid

Share link:In this post: Tether is planning to lend to commodity traders, using its billions in profits to shake up a sector traditionally dominated by banks. The stablecoin issuer has been in talks with many companies, offering loans that bypass strict banking regulations, speeding up payments and trades. USDT is already being used by countries to sidestep US dollar sanctions and facilitate commodity deals.

Tether, the issuer of USDT, the world’s largest stablecoin, is exploring new ways to use its massive profits. And so the company is now looking into lending to commodity traders.

This could seriously shake up the sector, which typically relies on banks for credit. Tether has already been having private talks with several companies that are hungry for funding, according to insiders

The goal is to offer US dollar loans to firms moving goods like oil, metals, and food across the globe.

Tether’s big play in commodity finance

USDT has already found a place in countries like Venezuela and Russia. Traders and producers there are using it to avoid dealing in US dollars due to sanctions.

Tether sees an opportunity to expand this by offering loans to the commodity sector on a larger scale. The company’s pitch is that it can provide funding without all the regulatory hurdles that traditional lenders face, which could speed up transactions and payments.

The big players, like Trafigura Group, have access to billions of dollars in credit through traditional banks. At the end of March, Trafigura had $77 billion in credit lines with around 150 institutions.

But smaller companies don’t have the same level of access. They often struggle to secure the funds needed to keep their operations running smoothly. Tether is stepping in to fill that gap.

See also Dogecoin price shows strong signs of upcoming rally

The company has been reporting some huge profits lately, which gives them the firepower to enter this space. In its most recent financial report, it showed a profit of $5.2 billion for the first half of 2024.

This money could easily be funneled into lending to commodity traders, which would give them a fresh source of capital that isn’t tied to traditional banks. Private credit has already started to make a mark in the sector, and Tether wants to take it further.

Tether’s CEO, Paolo Ardoino, confirmed that the company is actively exploring opportunities in commodity finance. “We are still in the early stages,” he told Bloomberg.

As the war in Ukraine continues to cause major disruptions in the commodity markets, traders have seen prices swing wildly. This has created a liquidity crunch for many firms, but also led to record profits for some.

The war has also shown just how reliant the commodity sector is on the dollar. The US government has used this reliance to its advantage, imposing sanctions that have targeted natural resource exports from underdeveloped.

What makes Tether’s pitch particularly interesting is that they don’t have to play by the same rules as traditional banks. Banks have to deal with tons of regulations when lending money, especially when it comes to financing trades involving raw materials.

See also Bernstein analysts predict Bitcoin surge if Trump wins election

These rules are designed to protect the banks from taking on too much risk, but they also slow things down. Tether, on the other hand, isn’t bound by these regulations, which means they can offer faster, more flexible financing options.

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Locked for new tokens.
APR up to 10%. Always on, always get airdrop.
Lock now!

You may also like

Hyperliquid launches native token HYPE

Coinjournal2024/11/30 00:33

Standard Chartered Analysts Predict Stablecoins Will Represent 10 Percent of US Economy in the Future!

Analysts at Standard Chartered and Zodia Markets predict that stablecoin adoption will see significant growth, potentially representing 10% of US M2 transactions in the future.

Bitcoinsistemi2024/11/30 00:00

Is $100,000 the Limit in the Bitcoin Rally or Will It Continue? Here’s a Clear Opinion for the Top

While the Bitcoin price has reached the $100,000 limit, the questioning of what goes beyond this level has begun. Here are the details.

Bitcoinsistemi2024/11/30 00:00