Original title: "Tether wants to be a bank! It plans to provide billions of dollars in credit to commodity traders. Will it be USDT?"

Original author: Natalia Wu, BlockTempo

Tether, the leading USD stablecoin issuer, is exploring the possibility of providing billions of dollars in loans to commodity traders, which may shake up an industry that has always relied heavily on traditional bank credit.

Bloomberg quoted people familiar with the matter yesterday (14) as saying that Tether has discussed opportunities for dollar loans with several commodity traders and how to use its stablecoins for more mainstream commodities.

Tether has also hired a team to develop related trade financing opportunities, and some of its executives also attended two major commodity industry events in September, including the Commodity Finance Industry Event in Geneva and the London Metal Exchange Week (LME Week).

Tether enters commodity trading financing

Credit lines are the lifeblood of commodity traders, who transport millions of dollars worth of oil, metals and food cargoes around the world. While industry giants have a large network of lenders to draw on, such as Trafigura Group, a leading global commodity supplier known as the "commodity giant", which had $77 billion in credit lines from about 150 institutions as of the end of March, smaller companies may find it difficult to obtain the funds needed to maintain shipments.

The report said that some people familiar with the matter said that Tether's publicity is particularly attractive to some commodity traders because its financing will not be subject to the same strict regulatory conditions as traditional lenders, which may help speed up payments and transactions.

While Tether does not provide audited financial results to commodity traders, it has demonstrated that it has the capital needed to participate in commodity trading credits. In its latest financial proof released in July, Tether reported a record high of $5.2 billion in net profit in the first half of 2024.

Tether CEO: Exploration in the commodity sector is still in the early stages

In response to the news, Tether CEO Paolo Ardoino confirmed to Bloomberg that the company is exploring opportunities in the commodity sector and said that these explorations are still "in the early stages."

"We may not disclose how much we intend to invest in commodity trading, we are still formulating our strategy.

We are interested in exploring the possibilities of different commodity trading, and I believe the opportunities here will be huge in the future"

Commodity trading loans are risky

However, Bloomberg also pointed out some risks in the field of commodity trading credit, such as new investors trying to enter the field often find themselves in trouble: top traders are usually able to obtain financing from traditional banks at very low interest rates, while investors seeking higher returns sometimes suffer losses after supporting traders with poor credit to conduct more complex transactions in more difficult parts of the world.

In recent years, a series of high-profile explosions, collapses, frauds and scandals have shaken confidence in the industry, and some of the largest lenders have withdrawn from natural resource trade financing.

In addition, there may be regulatory risks. The Russian-Ukrainian war has caused dramatic fluctuations in commodity prices, highlighting the commodity industry's dependence on the US dollar, providing the US government with tools to target natural resource exports through sanctions, which in turn stimulates unregulated financing and the use of stablecoins instead of US dollar transactions.

According to a previous report by Bloomberg, at least two of Russia's top metal producers have turned to stablecoins to settle cross-border transactions with customers and suppliers. The Wall Street Journal also reported that Venezuela's state-owned company PDVSA has expanded its use of USDT to pay for oil transportation to counter US sanctions.

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