Tether, the world's largest stablecoin company, is in discussions with mining and investment groups to invest a portion of its massive profits in the gold market. This potential move marks a significant foray from the crypto world into the precious metals sector.
According to sources, Tether's discussions cover various aspects of the gold supply chain, including mining, refining, trading, and royalty companies. Gold, as a store of physical value for millennia, stands in stark contrast to digital assets like Bitcoin, which emerged in 2009. However, some industry executives see parallels between the two.
Paolo Ardoino, CEO of Tether, likens gold to “a natural Bitcoin.” Speaking in May, he said: “People usually say that Bitcoin is ‘digital gold,’ but I prefer to think about it from Bitcoin’s perspective — gold is a gift from Mother Nature.”
Tether's interest has sparked surprise and skepticism within the conservative gold mining industry. One mining executive stated, “They like gold, but I don’t think they have a clear strategy.” Another commodities executive described the company as “the weirdest company I’ve ever seen.”
Tether is one of the most profitable cryptocurrency companies in the world, operating the US dollar-pegged stablecoin USDT, which has a market capitalization of $168 billion. The company generated $5.7 billion in profit in the first half of this year.
Tether is also among the largest holders of U.S. Treasury bonds, earning interest on these bonds to support its stablecoin.
Ardoino has long been a staunch supporter of gold, stating that it is safer than any sovereign currency and can be complementary to Bitcoin. According to financial statements, Tether has stockpiled $8.7 billion worth of gold bars in Zurich vaults as collateral for its stablecoin.
In June, Tether Investments, responsible for investing the company's profits, acquired a minority stake in Toronto-listed gold royalty company Elemental Altus for $105 million. Sources familiar with Tether's thinking revealed that the company has held talks with several gold royalty companies, which invest in mines in exchange for a share of future revenue. Tether is considering further royalty deals, including an additional investment in Elemental Altus.
In addition, Tether held talks with Terranova Resources, a British Virgin Islands-based gold mining investment vehicle, but did not reach an agreement.
Tether also operates a crypto token backed by physical gold, XAUT, although its market size is smaller than USDT, with a market capitalization of just $880 million. Furthermore, according to industry sources, Tether has established a significant position in commodity trade finance, providing short-term financing for the transportation of raw materials, and its transaction ledger has grown to billions of dollars.
Other companies are also attempting to bridge the gap between digital currencies and gold. Nasdaq-listed Blue Gold owns a mine in Ghana (whose licenses are under dispute), and CEO Andrew Cavaghan stated that he plans to launch a digital token for its future production.
He stated: “I believe that gold-backed tokens could be very successful as a form of currency globally, because people can clearly feel its authenticity — and it can be used directly for consumption or directly exchanged for physical gold.”
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