Tether Seeks $200 Billion Funding, Aims for $5000 Billion Valuation

Tether Holdings SA, the world's largest stablecoin issuer, is in discussions with investors to raise up to 200 billion dollars in funding. If the deal goes through, the cryptocurrency company could become one of the highest-valued private enterprises globally.

The company, headquartered in El Salvador, plans to issue approximately 3% of its shares through a private placement to secure between 150 billion and 200 billion dollars. However, the final amount raised could be significantly lower than these targets. The negotiations are still in the early stages, and the details of the proposed investment may change.

Based on the percentage of shares to be issued, this transaction could value Tether at around 5000 billion dollars, placing it in the same tier as OpenAI and SpaceX, owned by Elon Musk. Despite the relaxed regulatory environment in the crypto industry, the emergence of new competitors, and the threat posed by falling U.S. interest rates to its high returns, achieving this valuation would be a remarkable feat for a crypto company. As of Tuesday afternoon, Circle Internet Group Inc., Tether's closest competitor in the stablecoin market, had a market capitalization of around 300 billion dollars.

The transaction will involve the issuance of new shares rather than the sale of existing shares by current investors. Cantor Fitzgerald is serving as the main advisor for this fundraising effort.

Tether's CEO stated on the social media platform X (formerly Twitter) that the company is evaluating funding proposals from a group of prominent investors. The goal is to "maximize the company's strategic scale across all existing and new business lines," which include stablecoins, artificial intelligence, commodity trading, energy, communications, and media.

Tether is a leading player in the stablecoin sector, which consists of digital assets pegged to the value of fiat currencies. Its USDT (Tether) is pegged to the U.S. dollar and has a market capitalization of 1720 billion dollars, making it the largest stablecoin by market size. The second-largest stablecoin is USDC, issued by Circle, with a market capitalization of approximately 740 billion dollars.

Tether generates substantial profits by allocating its reserve funds, which back its tokens, to cash-like assets such as U.S. Treasury bonds and earning interest on them. According to a blog post released by the company in July, its second-quarter profit was 49 billion dollars. The CEO recently stated that Tether's profit margin is 99%. However, it is important to note that Tether's reported data does not adhere to the reporting standards required for publicly listed companies.

In recent months, Tether has been working to re-enter the U.S. market, aiming to capitalize on the pro-cryptocurrency policies supported by Donald Trump. The company recently announced plans to issue a stablecoin regulated by U.S. authorities and appointed a former White House official to oversee the project.

Prior to Trump's potential second term, Tether had not officially entered the U.S. market due to conflicts with regulatory bodies. In 2021, the company paid a 4100 million dollar fine to resolve allegations of "false statements regarding its reserve situation."

Over the past few weeks, potential investors have been granted access to a data room (a platform used to review confidential transaction information) to decide whether to participate in this new round of funding. The transaction is expected to be completed by the end of this year.