Tether Seeks $200 Billion Funding, Valuation Could Reach $5000 Billion

Tether, the leading stablecoin issuer, is in discussions with investors for a significant funding round of up to 200 billion dollars. If successful, this funding round would value the company at approximately 5000 billion dollars, placing it among the most valuable private companies globally, alongside tech giants like OpenAI and SpaceX.

The company, headquartered in El Salvador, is reportedly selling around 3% of its shares through a private placement, aiming to raise between 150 billion and 200 billion dollars. However, one of the negotiating parties noted that this figure is an upper limit, and the final amount raised could be significantly lower than expected. The negotiations are still in the early stages, and the details of the transaction may change.

Based on the 200 billion dollars funding and 3% equity stake, Tether's overall valuation would approach 5000 billion dollars, a milestone achievement for a company in the crypto industry. In comparison, Circle, Tether's largest competitor in the stablecoin market, has a market value of around 300 billion dollars.

The funding round will involve the issuance of new shares and will not include the sale of existing shares by current shareholders. The transaction is being advised by Cantor Fitzgerald.

Tether's USDT token, pegged to the US dollar, currently has a market value of approximately 1720 billion dollars, significantly higher than Circle's USDC, which stands at around 740 billion dollars. Tether's business model relies on investing USDT reserve funds in cash-like assets such as US Treasury bonds and generating profits through interest income. According to a blog post released by the company in July, Tether recorded 49 billion dollars in profits for the second quarter. The CEO recently claimed that the company's profit margin is as high as 99%. However, Tether's financial data does not comply with the disclosure standards of listed companies, raising concerns about transparency.

During the Federal Reserve's interest rate hike cycle, high interest rates have brought Tether substantial earnings. However, as US interest rates decline, this "interest rate spread feast" may gradually diminish, posing a challenge to the company's profitability model.

In recent years, Tether has faced regulatory conflicts and has largely withdrawn from the US market. In 2021, the company paid a 4100 million dollars fine to resolve allegations of misrepresenting its reserve status with regulatory authorities.

Tether is accelerating its preparations to re-enter the US market, planning to launch a stablecoin regulated by US authorities. The company has appointed Bo Hines, who previously oversaw crypto policy at the White House, to lead the new business, aiming to capitalize on policy opportunities.