By Federico Maccioni
DUBAI (Reuters) – Stablecoin Tether’s recent growth is being driven by its use as an alternative to the U.S. dollar in emerging markets, rather than by demand for cryptocurrency trading, Tether CEO Paolo Ardoino told Reuters on Friday.
Tether issues a stablecoin, also called Tether or USDT, which is designed to maintain a constant value of $1 and is widely used in crypto-to-crypto trading. It has grown rapidly in recent years, hitting more than $100 billion worth of Tether tokens in circulation in March. “In the last few years we have seen the usage of USDTgoing from pure cryptocurrency trading to being basically the most used digital dollar in the world”, Ardoino said on the sidelines of the Token2049 crypto conference in Dubai, where industry enthusiasts gathered despite heavy rains this week disrupting life in the desert city.
“Almost the entire user base is (in) emerging markets”, he said, mentioning Turkey, Vietnam, Brazil, Argentina and “African countries”, where dollars can sometimes be in short supply.
“Last year for sure Argentina has been booming,” he added.
Ardoino said Tether had just over 300 million users globally.
“We want to be the dollar for the last mile, for the unbanked,” he said. Regulators have long warned about market risks from the adoption of crypto assets. The Bank for International Settlements said in a paper last year that crypto assets had amplified financial risks in developing economies, in contrast to their “illusory appeal of being a simple and quick solution for financial challenges”.
In Argentina, cryptocurrency exchanges can play a role in the currency market, with locals and international traders alike using the Tether-peso pair on crypto exchanges as a proxy for the U.S. dollar-to-peso exchange rate. Crypto markets have mostly recovered from the collapses that saw prices plunge in 2022. Bitcoin, the world’s most valuable cryptocurrency, hit an all-time high of $73,803.25 in March, driven by excitement around inflows into U.S. spot bitcoin exchange-traded funds (ETFs), which Ardoino said had also supported Tether’s growth.
Ardoino, who became CEO in December while keeping the interim role of chief technology officer, said the company was hiring more people and would have around 150 staff, from about 100 currently, as it expands into new areas such as AI.
U.S. regulators have warned banks that stablecoin reserves could be subject to rapid outflows, for example if holders rushed to exchange such tokens back into traditional currency.
Tether, the third biggest cryptocurrency, says it maintains its dollar peg by holding dollar-based reserves that match the volume of cryptocurrencies it has created.
(Additional reporting by Elizabeth Howcroft in London; Editing Tommy Reggiori-Wilkes and Mark Potter)
Comments