Tether, the company behind the world's largest stablecoin, is reportedly in early-stage discussions with investors for a significant funding round. The deal could raise between $15 billion and $20 billion, potentially valuing the company at an estimated $500 billion.
The discussions, first reported by Bloomberg citing anonymous sources, are preliminary, and the final terms could change. However, Tether's CEO, Paolo Ardoino, has since confirmed the company is evaluating a capital raise to fuel a major expansion into new business sectors.
Key Takeaways
- Tether is in discussions to raise between $15 billion and $20 billion from investors.
- The proposed deal would value the stablecoin issuer at approximately $500 billion.
- CEO Paolo Ardoino confirmed the company is considering a capital raise to fund expansion into AI, energy, and communications.
- This valuation would place Tether in the same league as major tech firms like OpenAI and SpaceX.
- The company also plans to launch a new U.S.-regulated stablecoin, USAT, to expand its presence in the American market.
Details of the Proposed Investment
According to initial reports, the potential transaction would involve the sale of new equity through a private placement. Investors would acquire an approximate 3% stake in the company. While the talks are still in their initial phase, sources suggested the deal could be finalized by the end of the year.
If successful, a $500 billion valuation would represent a monumental milestone for a company in the digital asset space. It would place Tether's market value on par with some of the world's most valuable private technology companies, far surpassing its direct competitors.
Understanding Stablecoins
Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, typically a fiat currency like the U.S. dollar. Tether's primary product, USDT, is the largest stablecoin by market capitalization and is widely used for trading and transactions in the global crypto market.
CEO Confirms Expansion Strategy
Following the report, Tether CEO Paolo Ardoino addressed the news on the social media platform X. He confirmed that the company is actively exploring a strategic fundraising effort aimed at dramatically scaling its operations.
“Tether is evaluating a raise from a selected group of high-profile key investors to maximize the scale of the company’s strategy across all existing and new business lines (stablecoins, distribution ubiquity, AI, commodity trading, energy, communications, media) by several orders of magnitude,” Ardoino wrote.
This statement indicates that Tether's ambitions now extend far beyond its core stablecoin business. The capital would be used to aggressively pursue opportunities in diverse sectors, including artificial intelligence, energy, and media, marking a significant strategic pivot for the firm.
Tether's Financial Performance
According to a statement from CEO Paolo Ardoino on September 16, Tether generated $13.7 billion in profit last year. A partial audit released in May showed the company held $149.28 billion in total assets against $143.68 billion in liabilities for its fiat-backed stablecoins.
Valuation Puts Tether Among Tech Giants
A $500 billion valuation would be a landmark achievement, positioning Tether among an elite group of technology titans. For perspective, this valuation is comparable to that of OpenAI, the company behind ChatGPT, and Elon Musk's SpaceX.
The figure also dwarfs the valuation of its closest competitor, Circle, the issuer of the USDC stablecoin. Circle is reportedly valued at around $30 billion, highlighting the vast gap Tether's potential funding round would create in the stablecoin market.
Despite its massive profitability, Ardoino has previously stated that Tether has no plans to go public. He noted that the company does not require capital from an initial public offering (IPO), a sentiment that aligns with the current pursuit of a private placement deal with select investors.
Strategic Push into the United States Market
This potential fundraising coincides with Tether's renewed efforts to establish a significant footprint in the United States. The company recently announced its intention to launch a new U.S.-regulated, dollar-backed stablecoin named USAT.
To lead this initiative, Tether appointed Bo Hines as its strategic adviser for digital assets and U.S. strategy. Hines is the former executive of the White House Crypto Council, bringing regulatory and policy experience to the company's expansion plans.
Goals for the US Market
Hines has publicly stated that Tether's goal is to become “the largest player in the U.S. market.” The company plans to target two key demographics:
- Consumers who are underbanked or underserved by traditional financial institutions.
- Enterprise clients, including banks and other financial firms.
This strategy leverages the decade of experience Tether has with its flagship stablecoin, USDT, which is already used by hundreds of millions of people globally, particularly in emerging markets where access to stable financial instruments is limited. The launch of USAT is designed to replicate that success within the stringent regulatory framework of the United States.
