Tether, the operator of the world’s largest cryptocurrency pegged to the US dollar, is confident about its relationship with the United States government, partly due to the firm holding a substantial portion of US debt to back its Tether USDt (USDT) stablecoin.
Amid Tether USDt’s 10-year anniversary approaching, Cointelegraph talked to Tether CEO Paolo Ardoino about what helped Tether become one of the industry’s most significant and profitable players.
In the interview, Ardoino encouraged competition in the stablecoin market, emphasized Tether’s focus on developing countries and talked about Tether positioning itself as a good friend of the US.
A very brief story of Tether USDt
Tether USDt was launched on Oct. 6, 2014, under the initial name of Realcoin by Bitcoin Foundation director Brock Pierce, software engineer Craig Sellars and entrepreneur Reeve Collins.
Tether’s idea was to create a stablecoin or a stable digital currency that could maintain a 1:1 peg to the US dollar, providing a medium of exchange in the volatile crypto market.
Three years after its launch, Tether USDt’s market capitalization reached $1 billion for the first time ever, and the stablecoin’s market value has been rising massively since.
By July 2020, USDT broke a $10 billion market cap, rising around 900% in just about three years. In March 2024, Tether USDt posted a $100 billion market value milestone, leaving competitors like USDC (USDC) far behind.
Tether USDt (USDT) versus competitors in market value from 2015 to Oct. 4, 2024. Source: CoinGecko
Today, USDT has a $120 billion market, while Tether is a major industry player, with profits surpassing those of BlackRock in 2023.
CEO Ardoino believes that one reason Tether USDt grew at such a great pace is that USDT’s model was simple and understandable to the average person.
“So you send us dollars, we send you the same amount of USDT. You send back the USDT tokens, and we send back the dollars. Then, we invest the reserves in Treasury Bills and a few other safe assets. As simple as that,” the exec explained.
Referring to more challenging projects like algorithmic stablecoins, Ardoino opined that the industry often tends to make things very complex. “Only simple things will work in the long term. And that’s what we did compared to anyone else,” he added.
What has Tether done right and wrong since launch?
Apart from simplicity, Ardoino highlighted two key things that helped Tether beat its competition in a significant way.
One thing is that Tether has remained focused on stablecoins through the past 10 years, not getting distracted by trends like the initial coin offering (ICO) boom in 2017 or the rise of non-fungible tokens (NFT) in 2021.
“What Tether did very well was that it invented the stablecoin industry and also was very much focused on the most important usage and use case for stablecoins,” Ardoino said.
Tether has never pushed USDT’s use in decentralized finance because its focus was helping people who “needed the most to have an alternative payment system,” the CEO noted.
He believes that Tether’s second-best achievement is its good understanding of who needs USDT the most.
Tether CEO Paolo Ardoino. Source: Bloomberg
According to the CEO, the biggest demand for stablecoins is coming not from developed jurisdictions like those in Europe or the US but rather from developing countries like Argentina, Turkey and Vietnam, which always need access to the dollar.
“That’s what we realized before anyone else. That people want to hold that dollar, not in cash, but in a digital form because it’s much more convenient,” the CEO said. He stated:
“There is no point for us to compete in the US and Europe. Our focus has to be where we are needed the most.”
But there is something that Tether could have done better, and it relates to the way the company approached growing criticisms as USDT has progressed as one of the biggest stablecoins.
“We needed to be more forceful in explaining ourselves and being transparent with everything that we were doing,” Ardoino said, referring to a period between 2017 and 2021.
According to the exec, Tether has been actively reacting to criticisms since 2021. The firm started addressing them one by one and proving that facts did not support certain accusations.
Related: Tether USDT’s market share rises 20%, reaching 75% in two years
Ardoino stressed that Tether encourages competition in the stablecoin market, as there would be no stablecoin industry without competition. There should always be at least three to six stablecoins that work very well globally, he added.
Paolo on Tether’s relationship with the US government
While focusing more on developing countries, Tether has not overlooked its ties with the US. According to Ardoino, Tether has a “very good relationship” with the US government that is “much better” than that of competitors due to its compliance efforts with local authorities.
“Tether is the only stablecoin that onboarded the Federal Bureau of Investigation and the United States Secret Service,” Tether CEO stated, mentioning that the company also has 180 law enforcement agencies across 45 countries.
Tether also positions itself as a good friend of the US because it holds about $98 billion of US Treasury Bills, making it one of the largest US Treasury holders globally.
Major foreign holders of US treasury securities as of April 2024. Source: Statista
“I think that Tether is the best friend of the US government because we hold more US treasury securities than Germany, much more than any other competitor or any other financial institution in the world,” Ardoino stated. He added:
“We are happy to decentralize the ownership of the US debt, making the US much more resilient.”
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