CIt’s a crypto that doesn’t make headlines. Its courses do not ignite at the slightest statements from Donald Trump. And for good reason, the value of USDT, which Tether manages, a company drowning in profits ($6.2 billion in 2023), is aligned with the dollar.
USDT, the third crypto after bitcoin and ethereum, is what we call a « stablecoins ». Like other electronic currencies, it is registered on blockchains even if it is managed in a completely different way. In this case, no miners competing to get bitcoins every ten minutes.
A large pile of dollar reserves
To maintain parity with the dollar, the method, on paper, is simple. When a customer brings a dollar, we create a USDT, conversely if a dollar is withdrawn we burn one. For trust to reign, we must ensure that Tether, the company responsible for « stablecoins »has perfect coverage thanks to quickly mobilized reserves: the capitalization of USDT is around 220 billion dollars with counterparties in cash, bitcoins, gold, bonds and above all in an enormous mass of American Treasury bonds (at least 81 billion dollars) of which Tether is in fact one of the largest private holders.
How can we be sure that USDT is sufficiently collateralized? For a long time, doubt has plagued members of the crypto community. The American stock exchange authorities even imposed fines on Tether three years ago (totaling more than $50 million) to force it to be more transparent. Tether was founded by a trio of Americans including Brock Pierce, a film actor in his younger years who converted to business where he not only has friends. Tether is not listed on the stock exchange and an element of mystery still hangs over the company with holding companies in Hong Kong and Singapore and a relay in the British Virgin Islands.
To make matters worse, the Wall Street Journal recently revealed that a prosecutor in the Southern District of New York had opened an investigation into rumors suggesting that USDT exchanges were used for drug trafficking, organized crime, terrorism, and benefited cyber criminals. . Unconfirmed rumors. Tether CEO Paolo Ardoino, a Genoese with a passion for coding and AI, strongly denied these allegations. During a conference in October in Lugano, he recalled that Tether was doing everything possible, by collaborating with the FBI and the American Department of Justice, to curb abuses. For him, fraud committed with USDT is “a drop in the ocean” compared to embezzlement committed with the dollar. In any case, he added: “If the United States wants to kill us, they can press a button […] We are not going to fight them. »
The possibility of an offensive by the American justice system in December shook the markets of all cryptos, even bitcoin lost ground. This is because Tether is “to big to fail”. Every day the volumes exchanged in USDT ($190 billion) represent three times those recorded in bitcoin. Transactions would be higher than those of the traditional Visa network. THE “stablecoins” have two essential uses. They are a holding solution for crypto investors moving from one currency to another. ” THE “stablecoins” are essential to the ecosystem,” explains Thibaut Boutrou of Meria. They are in fact putting oil in the multiple cogs of the crypto universe. Another sensitive use, in countries where the use of the dollar is hampered (Iran, Venezuela, Russia, etc.), USDT allows you to transfer sums abroad with one click or, conversely, to receive them . As its value is relatively stable it can be preferred to bitcoin which is too volatile.
Already $7.7 billion in profits in 2024
Today, USDT, with 70% of the market, is by far the first « stablecoins ». Its competitor, Circle’s USDC, as opposed to the vagueness that surrounds the image of Tether, strives to give an image of transparency. Thus, Circle obtained approval from Canada and Europe that Tether deliberately ignored. For the American authorities, it does not matter that Tether and Circle are in direct competition. What matters to them is that practically 100% of the market is “stablecoins” dollars. The US Treasury thus places its Treasury bonds more easily, at a time when China is making no secret that, on the contrary, it wants to sell them…
The existence of “stablecoins” dollars also rules out a threat that the American authorities had abruptly put an end to in 2022. At the time, Mark Zuckerberg, the CEO of Facebook (now Meta), supported by other investors (Uber, Lyft, Iliad, Coinbase …), had set up a team in Geneva supposed to create a cryptocurrency. Libra, then called Diem, was ultimately to be indexed to the dollar. The American authorities did everything to block an initiative which aimed to create a private currency based on the two billion customers of the social network. Formerly of PayPal, David Marcus, the architect of the Libra project has just revealed how Washington went about breaking the project: he quite simply threatened the banks associated with the project with sanctions, a “political assassination of 100% %”.
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Kangaroo of the day
Answer
One question remains, what today would prevent an Amazon or a Meta from taking up a Libra-type initiative? Bad choice tells us Claire Balva of Deblock: “I don’t think it’s a good idea for Gafam to create their own currency. With the “stablecoins” crypto currencies pegged to the dollar are already here. » Which Tether can only rejoice about. His business is going well, very well in fact. For the first three quarters of this year alone the company posted a profit of $7.7 billion. Levels worthy of Goldman Sachs or Black Rock, but with only around a hundred employees. Money is flowing in so much that the company is investing in agricultural land, in biotechnologies, microprocessors, energy production… An abundance, largely due to the rise in interest rates which will surely come back down. Not enough, however, to dissuade Paolo Ardoino, its CEO, from avoiding falling under the wrath of American justice.
Find all the episodes of our series “The bitcoin rush”:
The crazy libertarian story of bitcoin
Is bitcoin really a currency?
Who are the bitcoin billionaires?
The juicy business of tether, the other dollar
Bitcoin and the psychedelic world of “meme coins”
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