S&P gave the “worst review,” but Tether's next step is more worth wary of
Author:100y
Original title: To See Tether's Future, Look at Its Investments
Compiled and organized by: bitPushNews
preface
Recently, S&P downgraded Tether's rating to the “worst level”, putting the world's largest stablecoin on the cusp once again.
In traditional financial narratives, this seems to mean risk, doubt, and uncertainty; however, in the reality of the crypto industry, USDT's share continues to expand, and Tether's investment landscape is rapidly expanding. From gold and Bitcoin to global payments, infrastructure, and cross-border networks, a huge digital financial system is quietly taking shape.
Downgrade and expansion are intertwined to form the most conflicting yet realistic financial picture of the moment:
The more uneasy the traditional rating system is, the harder it is to ignore Tether's influence.
summary
The order of an empire has always been inseparable from the status of money. The continued expansion of the USDT (Tether) scale is heralding the quiet rise of a huge digital finance empire.
This article will analyze it in depthTetherThe 20 companies recently invested in revealed the triple strategy of their imperial blueprint:
以Bitcoin and goldStrengthening trust as a cornerstone willBusiness reach extends to all continents of the world, and passedPerfect products and servicesEstablish a closed loop covering retail and institutional users.
1. Tether and the digital finance empire
1.1 Money and empire
Source: Dyken Wealth Strategies
Money is a commonly accepted medium of exchange and unit of value in everyday life. However, from an imperial perspective, the role of money goes far beyond simple transactions; it can also be understood as a power tool covering political, cultural, and social functions. Throughout the history of empires, currency has played the following additional roles:
A symbol of imperial order: The image of an emperor or imperial emblem engraved on coins symbolizes the authority of the empire in a visual form and becomes a token showing the user the imperial order.
Tools for imperial rule: By centralizing minting and issuing rights at the center, marginal regions have to rely on the core empire's monetary system, thereby strengthening imperial rule.
The measure of resource aggregation: The empire gathered resources from all over the world through taxes and donations, and currency was the key medium for standardizing and transferring these resources.
Without exception, the status of money has always been synchronized with that of the empire. When an empire grows and reaches its peak, its currency becomes strong and supports the empire. When an empire declines, its monetary status also declines, hastening the fall of the empire.
Today, terms like “empire” or “colony” are long gone, but we are far from getting rid of these concepts. The US plays the role of an empire supported by strong economic and military forces, and the US dollar already functions as the world currency.
Many non-US countries have tried to challenge the dollar's dominance in modern society, but have failed. The US dollar accounts for about 57% of global foreign exchange reserves and about 50% of SWIFT international settlements, solidifying its position.
1.2 USDT's unstoppable growth
Source: Artemis
With the development of information technology, a large part of the global economy has moved to the internet. With the advent of blockchain technology, which made it possible to use money safely online, the on-chain economy grew rapidly, and the currency used on the chain — stablecoins — also rapidly expanded to about 300 billion US dollars.
Among the many stablecoins, Tether's USDT is the most notable one. USDT makes it easy for people in many countries where their fiat currencies are highly unstable to access the US dollar, the imperial currency. Anyone with a connected mobile device can easily access dollars, even without a credit or bank account. This has opened the door to USDT's rapid growth, particularly in developing countries and third world countries.
More importantly, despite the passage of the GENIUS Act and the gradual integration of blockchain into the mainstream of regulation, USDT's market share has not declined significantly. USDT's share remains above 60%, more than double that of USDC, which is ranked second.
1.3 Towards a huge digital finance empire
Tether is building its own huge empire powered by its powerful currency USDT. But building an empire is no easy feat.
Although USDT is linked to the US dollar, its reserves include not only highly liquid cash equivalent assets such as cash, US Treasury bills, and repurchase agreements, but also relatively less stable assets such as precious metals, Bitcoin, non-US government bonds, and corporate bonds. In major countries that have established stablecoin regulatory frameworks, these types of assets are not legally accepted as reserves.
In fact, according to the EU's MiCA regulatory framework, USDT failed to meet several conditions for EMT (electronic currency tokens, covering the stablecoin category). As a result, exchanges operating in Europe removed USDT, effectively introducing USDT into the scope of use in the EU.
But Tether didn't back down. As a company, Tether earns equity by investing in various startups and businesses, and sometimes donates to non-profit organizations. By examining these actions, we can infer the direction Tether has chosen and how it is seeking to build a huge digital finance empire. Let's take a look at Tether's investment case to see how it overcame the challenges of empire-building.
2. What companies has Tether invested in?
2.1 Before you begin
Tether is a company that has attracted the full attention of the crypto community. This is understandable since Tether is the largest issuer of the USDT stablecoin and is also considered the highest paid company per employee in the world.
However, the crypto community seems less interested in Tether's startup and enterprise investment activities. More precisely, people are only interested in those protocols that issue Tether-backed tokens. Typical examples are the Stable and Plasma chains dedicated to USDT.
However, these two projects were not directly invested by Tether, but byBitfinexCEO of USDT0, and TetherPaolo ArdoinoInvestments from other related entities.
Tether is very active in corporate investments, but most of the companies it invests in don't issue tokens and don't have a strong geographical identity, so these investments haven't attracted much attention from the crypto community. Even so, looking at Tether's investment case can reveal clues about the direction Tether aims to pursue.
2.2 What types of companies does Tether invest in?
Tether announced its investment via a press release on its website. After analyzing the investment announcements for about a year and a half, I was able to distill the following key topics:
European market: Although USDT has been effectively launched in the European Union, Tether is still seeking to enter the European market by investing in issuers and platforms within Europe.
Emerging markets: USDT's market fit has been verified in emerging markets. Tether is strategically expanding its influence in these regions.
retail: Tether invests in various non-custodial wallet developers to ensure easy access to USDT for retail users.
institutions: In addition to retail and emerging markets, Tether has also invested in business-oriented solution providers to help institutions access USDT more easily.
Bitcoin: Tether has continued to invest in BTC and the broader Bitcoin ecosystem.
gold: Tether sees gold and BTC together as an important geopolitical asset, and is accelerating its dual-axis strategy around Bitcoin and gold.
Future technology: Tether not only invests in currency-related businesses, but also in advanced technology that contributes to human society.
These themes reflect the coherent strategic direction of the digital finance empire Tether aims to build.
2.3 Indirect strategies to enter the European market
StaBlr
Stablr is a mica-compliant stablecoin issuer registered in Malta to issue EURR pegged to the euro and USDR pegged to the US dollar. While receiving the investment, STABLR plans to use Tether's tokenization platform Hadron. Hadron is a SaaS platform designed to easily tokenize various assets such as stocks, bonds, commodities, and stablecoins, and has strong capabilities in supporting complete token lifecycle management, KYC, AML, monitoring, and other regulatory compliance infrastructure.
Quantoz
Quantoz is a MICA-compliant stablecoin issuer offering EURQ and EURD (both pegged to the euro) and USDQ (pegged to the US dollar). Among them, EURD is used exclusively for closed loop systems. Compared with EURQ, EURD can be understood as a general purpose stablecoin. Quantoz also plans to use Tether's Hadron tokenization platform.
Bit2Me
Bit2Me is the largest digital asset platform in the Spanish-speaking world. Individuals, businesses, and institutions can trade and invest in various cryptocurrencies, and connect to various financial activities such as remittances, payments, and loans. Bit2Me was founded in 2014, has been in operation for over ten years, has over 1.2 million users, and is a major platform. In particular, Bit2me operates under MICA compliance and holds a CASP license, which makes it a highly strategic investment for Tether.
2.4 Targeting Emerging Markets
Parfin
Parfin is an institutional blockchain infrastructure company based in Latin America. Parfin provides a management and workflow platform that enables financial institutions to easily adopt blockchain technology and cryptocurrencies, secure MPC wallet solutions, and asset tokenization services. Parfin has also received investments from leading global venture capitals such as Framework, Valor, Accenture, and Parafi. By investing in Parfin, Tether aims to help Latin American financial institutions use USDT more easily.
Kotani Pay
Kotani Pay is a Web3 payment infrastructure company headquartered in Africa that provides services such as fiat currency deposits and withdrawals, stablecoin settlement and payments, and SMS-based blockchain wallets. By investing in Kotani Pay, Tether plans to expand its deposit and withdrawal infrastructure to make it easier for African people to access USDT.
Shiga
Shiga is an Africa-based blockchain financial solutions company that provides a wide range of blockchain services, including deposits and withdrawals between local currencies and stablecoins, over-the-counter (OTC) transactions, corporate virtual accounts, corporate treasury management, and blockchain solution development. These services enable individuals and businesses in Africa to easily access the dollar economy through on-chain finance. Tether said it sees Africa as a key region for USDT adoption and is investing in Shiga to actively expand into the continent.
Sorted
Sorted is a wallet solutions company headquartered in Africa and South Asia, providing non-custodial wallets that run smoothly on basic feature phones and low-end smartphones. This has greatly increased financial accessibility for the poor or unbanked. Sorted users can easily send, pay, and withdraw cryptocurrency. By investing in Sorted, Tether is also expanding its influence in Africa and South Asia.
Kem
Kem is a widely used cryptocurrency remittance, payment, and financial management application in the Middle East. Users can use their crypto assets within the Kem app to send and pay, link them to physical cards, and even invest in assets such as gold. Like Africa and Latin America, the Middle East also has a large number of foreign workers, so USDT-based cryptocurrency remittances can greatly stabilize their lives. Tether plans to expand USDT's market share in the Middle East by investing in KEM.
CityPay
CityPay is a crypto payments company based in Georgia. In addition to Georgia, it is also actively expanding its business to Eastern Europe, including Armenia, Azerbaijan, Kazakhstan, and Uzbekistan by providing wallet services, launching payment cards, and acquiring crypto payment merchants. By investing in CityPay, Tether aims to strategically secure USDT's share of the Eastern European payments market.
2.5 Retail Strategy
It's important to note that Sorted and Kem mentioned above are also non-custodial wallet solution companies and can fall into the category of retail strategies.
Fizen
Fizen is a consumer-oriented crypto superapp. Users can store, transfer, and use cryptocurrencies through self-hosted wallets, and Fizen also provides features such as payments, shopping, and gift cards, making it easy for users to integrate cryptocurrency into their daily lives. By investing in Fizen, Tether aims to provide USDT users with a high-quality user experience, enabling USDT to be widely used for everyday payments.
Be Water
Be Water is a media and content company headquartered in Italy that engages in various businesses such as the production and distribution of movies, TV, and documentaries, and operates a news brand. Tether acquired 30.4% of Be Water's shares with an investment of 10 million euros, providing a foothold for Tether to expand beyond the financial sector to the global content ecosystem.
Zengo
ZenGo is an MPC (multi-party computing) -based wallet solution that allows users to securely use self-hosted wallets without managing complicated mnemonics. By investing in Zengo, Tether enables users to more securely store, send, and use Tether-based assets for payments.
2.6 Institutional Strategy
It should be noted that Parfin is also a company that serves Latin American financial institutions, so it is also included in the institutional strategy.
Crystal Intelligence
Crystal Intelligence is a blockchain intelligence company responsible for fraud detection, risk monitoring, real-time wallet address analysis, regulatory support, illegal money tracking, and criminal response. By investing in Crystal Intelligence, Tether plans to strengthen cooperation with them to improve their ability to prevent USDT from being misused for illegal activities. This is an important strategic investment for USDT's forward development as an institutional-friendly stablecoin.
2.7 Investments in the Bitcoin industry
Ledn
Ledn is a Bitcoin-backed lending platform that allows individuals and businesses to borrow stablecoins using BTC as collateral without having to sell their BTC. Tether has always focused on building infrastructure that connects crypto assets to actual financial use cases, and as Ledn is pioneering a new market for Bitcoin finance, Tether has invested in Ledn.
Adecoagro
Adecoagro is South America's largest sustainable agriculture and renewable energy company and is also listed on the New York Stock Exchange. Adecoagro sells some of the electricity it generates on the spot market, but revenue may be unstable due to high price fluctuations. Seen from this perspective, Bitcoin mining can act as a fixed electricity offender. Tether plans to acquire up to 70% of Acoagro's shares to jointly advance the Bitcoin mining project.
BTCPay Server Foundation
BTCPay is an open source Bitcoin and stablecoin payment processor. It uniquely uses a self-hosted model, which allows users to run directly on their own servers. Tether has supported BTCPay for two consecutive years to strengthen the infrastructure that enables Bitcoin and USDT censorship-resistant payments.
openSats
openSats is a 501 (c) (3) public charity in the US that funds Bitcoin and censorship-resistant technology. openSats operates a sustainable model that supports the Bitcoin open source ecosystem, with donations for Bitcoin protocol development, privacy tool development, research, and education. Although this isn't an investment, Tether has been donating to openSATS, showing its continued support for Bitcoin and the open source ecosystem.
2.8 Gold as a geopolitical asset
Elemental Altus Royalties
Elemental Altus Royalties is a company associated with gold mining, but it doesn't mine directly. Instead, it generates revenue by signing concession agreements with gold mining companies. Tether sees gold along with Bitcoin as the infrastructure for digital currencies, and to reinforce its gold-related strategy, it has acquired a 31.9% stake in Elemental Altus Royalties.
alloy
Alloy is a service directly launched by Tether, not an invested company, but it is included here because it plays a key role in Tether's gold-related strategy. Tether provides a gold token service called xaut, and alloy is a service that issues AUSDT, a gold-backed stablecoin secured by XAUT. This is an attempt to recreate the historical gold standard, and Tether's move to strengthen its gold-bitcoin strategy.
2.9 Investments in future technology
Blackrock Neurotech
Blackrock Neurotech is a leading company in the field of brain-computer interfaces, founded by a research team at the University of Utah. The technology developed by the company implants electrodes into the brain to transform thoughts into digital signals. People with reduced mobility, lack sensory function, or face communication challenges can significantly improve their quality of life with Blackrock Neurotech's technology. Through this investment, Tether became a major shareholder, marking its ambition beyond the financial sector to advance future technology that serves humanity.
3. Tether's Strategy to Build a Digital Finance Empire
Source: Tether
Tether holds $135 billion worth of US Treasury bills, a huge number, making it ranked 17th globally, surpassing South Korea.
In fact, Tether has built a digital empire based on its currency USDT.
Through companies that Tether has recently invested in, we can observe Tether's strategy to build a digital empire.
Ensuring trust: Tether aims to ensure user trust through Bitcoin and gold, the two main assets.
Global expansion: Tether seeks to cover all continents, including Asia, Africa, South America, Europe, the Middle East, and recently entered the US market through USAT.
Increased accessibility: Tether aims to enable retail users, businesses, and institutions to easily access USDT in their daily lives and financial activities through a variety of services.
Some had predicted that Tether and USDT's position would weaken as blockchain became increasingly regulated, but this prediction proved wrong. I have no doubt that the US-based stablecoin industry will continue to grow, and I am convinced that the influence of Tether and USDT will accelerate.
At the end of the day, we are on the edge of a digital empire based on USDT, an empire so huge that it cannot fail.
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