Tether Holdings SA, recognized as the issuer of the leading stablecoin globally, is currently in preliminary discussions with investors to secure funding of up to $20 billion. According to a report from Bloomberg, if these negotiations prove fruitful, Tether may join the ranks of the most highly valued private companies in the world.
Insider sources reveal that Tether is aiming to raise between $15 billion and $20 billion in return for approximately a 3% equity stake through a private placement. However, a source involved in the talks has pointed out that these figures represent the upper end of expectations, and the final amounts could be significantly lower. The negotiations remain in the initial stages, and specifics could change as discussions progress.
Should Tether achieve its high-end fundraising goal, it could be valued at around $500 billion, placing it alongside industry giants like OpenAI and Elon Musk’s SpaceX. This would signify an extraordinary ascent for a crypto powerhouse that has traditionally operated under minimal regulatory oversight. Meanwhile, as new competitors emerge and reduced interest rates in the US potentially diminish earnings, the challenges ahead are significant. Tether’s closest competitor, Circle Internet Group, a publicly traded stablecoin issuer, has a market valuation of approximately $30 billion as of recent reports.
This investment round would involve issuing new shares, with existing shareholders not cashing out. Cantor Fitzgerald is acting as the lead financial advisor for the deal.
Paolo Ardoino, Tether’s CEO, has acknowledged that the firm is exploring financing options from notable investors. In a post shared on X, he indicated that the objective of this funding is to facilitate expansion within existing markets as well as in new sectors, including stablecoins, artificial intelligence, commodities trading, energy, and media. Cantor Fitzgerald has yet to comment on the matter.
The initiative to raise funds aligns with Tether’s broader strategy to reestablish its foothold in the United States, where it has been largely absent due to regulatory disputes, including a $41 million settlement in 2021 related to claims of misrepresentation of reserves. However, with the shift in the political climate and a more favorable stance towards cryptocurrency from the Trump administration, Tether appears poised for a comeback. Recently, the company appointed a new CEO for its U.S. operation, known as USAT, which will operate under the GENIUS Act framework.
Stablecoins function as digital assets designed to maintain parity with traditional currencies. Tether’s USDT token, pegged to the US dollar, boasts a market capitalization of $172 billion, significantly surpassing Circle’s USDC, which stands at $74 billion. Tether has been able to generate substantial profits by investing its reserves in liquid assets such as US Treasuries; the company reported profits of $4.9 billion for the second quarter. Ardoino has also claimed that Tether enjoys a profit margin of 99%, although it is not subject to the same reporting requirements as publicly traded companies.
For months, Tether has been laying the groundwork for its U.S. strategy. The firm has not only announced plans to introduce a regulated stablecoin but has also enlisted Bo Hines, a former official from the White House focused on crypto, to spearhead its entry into the U.S. market.
Potential investors have recently been granted access to the company’s data for review, indicating that they may soon finalize the fundraising process, which is expected to conclude by the year’s end.
(Photo by Jievani Weerasinghe)
See also: Brandon Lutnick teams up with SoftBank and Tether on a $3.6bn bitcoin investment vehicle
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