Tether, the largest stablecoin issuer, has started exploring ways to expand its investments beyond digital assets. The company has opened talks with several groups in the gold industry, looking at opportunities that range from mining and refining to trading and royalty firms.
This move constitutes an attempt to invest the significant crypto profits in physical commodities. Gold has always served as a safe depository of wealth, while bitcoin first arrived in the world only in 2009 as a digital instrument. Although both are in marked contrast to each other, both today capture the investor’s eye as alternatives to fiat currency.
Tether leadership has publicly announced its interest in gold and framed it as a complement to bitcoin and not as a competitor. The step marks an attempt to pair digital innovation with physical assets that carry historical value. The company’s financial strength gives credence to the ambitions.
Tether adds $100 million as Elemental merges with EMX
The Tether USDT token, which is pegged to the US dollar, has a market cap of $168 billion. The cryptocurrency most actively traded by volume is the stablecoin, and Tether made a profit of $5.7 billion in the first half of the year. Most of this is in the form of interest earned on the huge US Treasury holdings.
Tether already has exposure to gold. Financial statements verify it has $8.7 billion of bullion in a Zurich vault that it holds partly on collateral for its stablecoin. This year already, the investment arm has purchased a $105 million stake in Elemental Altus, a Canadian-listed gold royalty company.
The firm put in another $100 million to that investment as Elemental neared a merger with rival EMX. The transactions indicate ongoing efforts to tie the balance sheet of Tether to the gold industry. The firm also discussed potential transactions with other participants.
Tether expands beyond stablecoins into commodities
Talks with Terranova Resources, a British Virgin Islands-registered investment vehicle, did not continue. However, sources suggest Tether continues to consider royalty businesses as part of the gold-related strategy.
Apart from token equity stakes, Tether also runs XAUt, a token backed by physical bullion, whose scale at $880 million is tiny compared to USDT. Tether has also expanded the commodity trade finance business by reaching out to consignments of raw materials and extending liquidity to them. This is a business that insiders say has scaled the billions.
Although the conventional mining community harbors doubts when a cryptocurrency firm ventures into the industry, the size and cash flow of Tether provide it room to follow nonconformist paths. Its move into gold forms part of a bigger trend as other firms seek to fill the gap between digital and physical assets to retain value.
