Tether has set foot in another diversification plan that will help the stablecoin gain more traction around the world. Bloomberg reports that according to Tether CEO Paolo Ardoino, the business is looking toward prospects in traditional finance and commodity trading (TradFi).
The stablecoin reserves won’t be impacted by these ventures, which will be managed by a separate Tether investment department. Tether has spoken with a number of commodity-related businesses about potential US dollar loans.
The news was in tandem with a skyrocketing volume for USDT. At the press time, the trading volume for the stablecoin was at $69.8 billion, up over 55% as compared to the same time last day.
Tether’s US Dollar Loans Seem Highly Likable
Bloomberg in its report highlights that Tether’s proposition is especially appealing because its funding would not be subject to the same strict regulatory requirements as traditional lenders, possibly accelerating trades and payments.
Commodity trade finance has seen some penetration by private credit, and Tether, which reports having the necessary capital but does not release audited financial statements, claims to be able to participate. In July, Tether released its most recent financial certification, which showed $5.2 billion in earnings for the first half of 2024.
Tether’s New Diversification Stays Parallel To Its Growth
Tether’s current surge in trading volumes suggests that investors are likely taking the diversification plans in a good spirit. Following several volatility in prior years, the demand of Tether, or USDT, has steadily increased relative to the US dollar since 2020, fulfilling its intended purpose.
At present, it stands as one of the most liked stablecoin in the market. This essentially implies that one Tether will almost always be equivalent to one US dollar. What makes a stablecoin unique is its relative stability, which is particularly crucial for decentralized lending and borrowing, in contrast to the price evolution of other cryptocurrencies.
Why Are Stablecoins Gaining Popularity Across the Globe?
Stablecoins function as a link between the worlds of cryptocurrencies and traditional finance, functioning as “cash” in the context of the former. Stablecoins’ increasing market capitalization suggests that traditional finance is putting more money into the cryptocurrency space, which is increasing the amount of liquidity in the market.
This explains the clear relationship between the rise and fall in the market capitalization of cryptocurrencies and their bull and bear cycles. In bull markets, the market capitalization increases as more money enters the ecosystem. On the other hand, in bear markets, capital leaves the cryptocurrency ecosystem and market capitalization declines.