TLDR:
- Tether financed a $45M crude oil deal involving 670,000 barrels from the Middle East
- The transaction was between a major oil company and a commodity trader in October 2024
- This marks Tether’s entry into the $10 trillion trade finance industry
- Tether has reported $7.7 billion in profits in 2024 so far
- The company is diversifying beyond stablecoins into commodities, Bitcoin mining, and AI
Tether, the company behind the world’s largest stablecoin USDT, has completed its first venture into oil trading by financing a $45 million crude oil transaction.
The deal, finalized in October 2024, involved the transport of 670,000 barrels of Middle Eastern crude oil between a publicly traded oil company and a top-tier commodity trader.
The transaction marks Tether’s first step into the trade finance industry, a $10 trillion market that plays a key role in global commerce. This move represents a major expansion beyond Tether’s core business of issuing the USDT stablecoin, which serves as a crucial tool for crypto trading and international payments.
Paolo Ardoino, Tether’s CEO, explained that the company aims to improve the efficiency of traditional markets.
“With USDT, we’re bringing efficiency and speed to markets that have historically relied on slower, more costly payment structures,” Ardoino stated in the announcement.
The deal was executed through Tether’s Trade Finance business division, which focuses on combining blockchain technology with traditional trade finance operations. This new venture comes as Tether looks to expand its presence beyond the cryptocurrency sector.
Tether’s financial position appears strong, with the company reporting $7.7 billion in net profits for 2024 so far. A large portion of these earnings comes from yields on its substantial holdings of U.S. Treasury bills, which amount to $80 billion.
The company maintains a diverse reserve portfolio, including over 7,100 Bitcoin, valued at more than $530 million at current market prices. As of September 30, Tether’s total assets reached $134.4 billion, with $102.5 billion held in U.S. Treasury bills.
This expansion into oil trading follows Tether’s earlier announcement in October about plans to lend billions of dollars to commodities trading companies. The move aims to provide alternative financing options in an industry traditionally dominated by conventional banking institutions.
The USDT stablecoin, which maintains a steady value of one U.S. dollar, has become increasingly important in global finance. Beyond its role in crypto trading, USDT is gaining popularity as a payment and savings tool in emerging economies.
Tether has been actively diversifying its business interests. The company has made investments in various sectors including renewable energy, Bitcoin mining, artificial intelligence, telecommunications, and education.
The company’s market presence continues to grow, with USDT’s share of the stablecoin market reaching 75%. This dominance underscores Tether’s influence in both cryptocurrency and traditional financial markets.
Recent developments have not been without controversy. The Wall Street Journal reported allegations of a U.S. criminal investigation into possible sanctions and anti-money-laundering law violations, which Tether has denied. Ardoino responded by affirming the company’s commitment to respecting American sanctions and maintaining its position as a major purchaser of U.S. debt.
The oil transaction structure involved standard industry practices, with Tether providing financing for the physical movement of crude oil between established market participants. This approach demonstrates Tether’s ability to operate within traditional commodity trading frameworks.
Looking ahead, Tether has indicated plans to expand its involvement in commodity trading. “This transaction marks the beginning, as we look to support a broader range of commodities and industries,” Ardoino noted in the announcement.
According to Bloomberg, Tether has been exploring ways to use its stablecoin for global traders in various markets. The company’s expansion into trade finance represents a strategic move to establish itself in conventional financial services.
