**Tether Expands into Commodity Lending, Extends $1.5 Billion in Credit**
Tether has made a significant move into the commodity lending market by extending $1.5 billion in credit to commodity traders. The company is providing financing in both its USDT stablecoin and cash, signaling a strong commitment to expanding its presence in this sector. CEO Paolo Ardoino has announced plans for dramatic growth in commodity lending, particularly targeting agricultural products and oil.
### Tether’s Trade Finance Unit and Focus on Commodities
Tether’s Trade Finance unit is at the forefront of this new venture, specializing in short-term credit solutions designed to facilitate global supply chains and commodity trades. The unit helps traders secure the financing they need to purchase, transport, and deliver goods efficiently. By April 2024, Tether had already extended $1.5 billion in credit, with ambitions to expand significantly in the coming months.
This expansion aligns with Tether’s strong financial standing, boasting nearly $184 billion worth of USDT in circulation. The company aims to serve traditional commodity traders by offering liquidity that competes favorably with conventional banking options. This strategic move further cements Tether’s role as a major player in the evolving global financial landscape.
### Challenges in Borrowing USDT for Commodity Trades
Despite these advances, some traders remain hesitant to borrow using USDT instead of traditional U.S. dollars. Concerns about stablecoin volatility and regulatory uncertainties contribute to this caution. However, as Tether’s market influence grows, these concerns are likely to diminish.
Tether’s deep liquidity enables it to provide competitive lending terms, which could persuade more traders to consider using USDT for their financing needs. Ardoino’s statements highlight the company’s determination to enhance its involvement in commodity markets, recognizing growing interest from businesses seeking digital finance solutions.
### Success with Tether Gold and Strategic Diversification
Beyond commodity lending, Tether has also found success with its tokenized gold product, Tether Gold (XAUT). This offering has gained traction amid rising gold prices, supported by the company’s holdings of over 100 tons of physical gold. This diversification into commodities reflects Tether’s broader strategy to leverage its stablecoin dominance and venture into related financial industries.
Ardoino emphasized that the success and widespread adoption of USDT are instrumental in funding these new business initiatives. By capitalizing on its established position in the stablecoin market, Tether is positioning itself as a key player in trade finance and commodity lending, potentially transforming how commodities are financed worldwide.
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*Source: Blockonomi*
https://bitcoinethereumnews.com/tech/tether-expands-into-commodity-lending-extends-1-5-billion-in-credit/
