As Banks Withdraw, Tether Fills Commodity Lending Void with Speed and Scale

Stablecoin giant Tether Holdings SA is set to expand "dramatically" into commodity lending, having already extended roughly $1.5 billion in credit to traders in sectors such as oil, cotton, wheat, and other agricultural products, CEO Paolo Ardoino revealed in a recent interview with Bloomberg. The move marks a strategic pivot for Tether, which has leveraged its vast reserves-backed by nearly $200 billion in assets-to enter the high-yield trade finance market. The company is offering loans in both U.S. dollars and its USDT stablecoin, which is pegged 1:1 to the greenback.

The commodities lending operation is part of Tether's Trade Finance unit, launched in 2022, and operates independently from the reserves that back its stablecoins. Ardoino emphasized that the firm's financial firepower, derived from interest income on Treasury bills and other liquid assets, positions it to compete with traditional banks in a sector where credit is often scarce for smaller traders. "We are going to expand dramatically," he said, noting that the team is "super bullish" about the initiative.

The shift into commodity finance is partly driven by a vacuum left by traditional lenders. Over the past several years, banks have scaled back lending to riskier markets due to regulatory pressures and a series of high-profile defaults. Smaller commodity traders, who lack access to deep institutional credit lines, now face tighter liquidity constraints. Tether's entry into this space offers a faster, more flexible alternative, with loans processed in minutes rather than weeks. The firm's use of USDT also appeals to traders in regions where stablecoins are gaining traction, such as Latin America, where Ardoino highlighted growing adoption.

Tether's strategy aligns with its broader diversification efforts beyond stablecoins. The company has amassed one of the largest private gold reserves in the world, holding over $12 billion in physical bullion as of September 2025. It recently hired two senior metals traders from HSBC-Vincent Domien, global head of metals trading, and Mathew O'Neill, regional head of precious metals-to strengthen its gold operations. These hires underscore Tether's ambition to bridge traditional commodities with digital assets, as seen in its gold-backed token, Tether Gold (XAUT), which has a market cap of $1.56 billion.

The commodities lending push also reflects Tether's confidence in the short-term, high-frequency nature of trade finance. Unlike long-term loans, commodity credit is often repaid within weeks as goods are transported and sold, enabling rapid interest generation. For example, a voyage transporting wheat or oil typically takes less than a month, allowing Tether to recoup capital quickly. This model contrasts with traditional banks, which often require extensive due diligence and collateral.

Regulatory scrutiny remains a challenge, as Tether's financial results are not audited. However, Ardoino projected $15 billion in profits for 2025, driven by interest income from its reserves. The company has also faced questions about transparency in its gold holdings, though it maintains that its reserves are fully backed and regularly attested.

Industry analysts suggest Tether's expansion could disrupt the commodity trading landscape. By offering competitive rates and leveraging its stablecoin infrastructure, the firm could attract traders seeking faster access to capital. At the same time, the use of USDT in lending may accelerate the token's adoption in emerging markets, where dollar liquidity is critical but traditional banking services are limited.

As Tether scales its commodity lending operations, it faces the dual challenge of managing risk in volatile markets while maintaining its reputation for stability. The company's success in this arena could further cement its role as a bridge between traditional finance and digital assets, a position it has cultivated through its dominance in the stablecoin sector.

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