Tether Enters Global Lending Market

Tether has expanded into new business by entering the lending market. This venture has a different structure from tokenized private credit; it involves co-investing in a fund with a London-based asset manager.

Through this, Tether aims to broaden the use of its stablecoin USDT for cross-border fund transfers.

This move focuses on expanding USDT's role in fund transfers and payments, rather than tokenizing private credit itself.

Tether currently manages substantial funds, with an outstanding issuance balance of $180 billion. Leveraging this asset base, the company is actively pursuing additional business diversification beyond interest-linked profits.

This entry into the lending market is part of an effort to expand the utility of USDT and build a stable business model by reducing reliance on interest rate volatility for profits.

Tether is co-investing in the fund with Oobit Capital, committing an initial anchor capital of $400 million, with a goal to attract an additional $3 billion from external investors.

In this collaboration, Tether will provide fund management advisory services and core payment infrastructure.

Specifically, Tether will focus on using USDT as a payment rail to enhance the efficiency of cross-border fund transfers.

Oobit Capital, meanwhile, will be responsible for evaluating loan assets and executing actual fund disbursements, dividing roles based on their respective expertise.

This test focused not merely on token issuance, but on verifying real transactions and sanction response capabilities via public blockchains.

Through this, US Bank is exploring the possibility of applying blockchain technology to actual banking operations, confirming the scalability and utility of public blockchains.

In the past, the financial sector primarily attempted to adopt blockchain technology through permissioned networks or internal systems. However, there is a growing trend to utilize public blockchains, as seen in cases like JPM Coin by JPMorgan.

The US Bank case is highly significant because it tested not only simple token issuance but also real transactions, along with regulatory compliance and necessary response measures.

The main reason banks primarily used private chains was due to issues of fund control and recovery. Measures were needed to freeze and recover funds sent incorrectly or used in criminal activities.

However, stablecoin issuers like Tether and Circle now have the capability to instantly freeze sanctioned funds, lowering the technical barrier to using public blockchains.

The recent trend in financial stablecoin issuance shows a focus on distribution through consortia rather than standalone issuance. Since stablecoin platform creation itself has low profitability, a model where multiple financial institutions participate to share issuance and distribution is preferred.

Key examples include Open USD and a consortium of 20 financial institutions led by Goldman Sachs.

US Bank is also highly likely to join such a consortium in the future.

The consortium model has the disadvantage of slow decision-making due to the need to coordinate the interests of multiple participating institutions. While it may proceed slower than standalone issuance, once a product is released, the involvement of numerous global financial institutions makes it highly advantageous for securing an early user base.

For example, if 20 global financial institutions create a dollar-pegged stablecoin as planned by the first half of next year, it could start with a much stronger user base than a standalone issued coin.

Conversely, standalone issuance offers faster decision-making but faces limitations in achieving economies of scale.

Ultimately, ensuring interoperability between different coins is expected to emerge as a key challenge in the long term.