Flush With Cash, Tether Has Got Microsoft, Google, and Amazon in Its Crosshairs

August 12, 2024:

WIRED: This year, Tether has moved to diversify its business model with a push into venture capital. Tell me about the rationale.

Ardoino: Tether has become extremely profitable in the last two years thanks to the increase in interest rates. When Tether started, you could make 0.2 percent on the reserve, but today you can make 5.5 percent. Of course, that might be time-limited—we are hearing about potential rate cuts—but it’s very hard even with inflation at 3 or 4 percent to go back to the 0.2 percent scenario.

In the last 24 months, Tether has accrued around $11.9 billion profit. With this amount of money, we could have distributed it all to shareholders, to make everyone happy. Instead, part of it is being added to the reserve to further back the stablecoin, and the rest is basically being held in the investment arm.

What is your venture investment thesis? It seems like you are looking beyond the crypto industry.

We came from bitcoin—we are bitcoiners at heart. Maybe we are not perfect at being humans, but we are trying to carry with us the bitcoin ethos in terms of financial freedom, freedom of speech, and freedom of access to technology in every venture we invest in.

The concept of decentralization can be applied to different areas, like artificial intelligence. We are already seeing how AI is being heavily politicized. We believe that having a player independent of the classic actors—like Amazon, Microsoft, and Google—is going to be very, very important.

The same goes for another important technology: brain-computer interface, or BCI. That will be fundamental in the future. Building brain-computer interfaces that respect people’s privacy—that ensure data remains local and will not be harvested by the same companies running social media platforms—will be very important.

We are not a classic VC. We don’t throw money at companies just to try to find a unicorn that will make us 100X. Of course, that would be nice, but it has to be aligned with our vision. Interdependence, resilience, and disintermediation—these terms are very important to us.

How much capital will Tether commit to venture investments?

We will always prioritize the stablecoin business, because risk management is very important. Right now, we have a good buffer on top of the reserve, but if USDT keeps expanding, we will expand that proportionally.

But almost everything else—I would say more than 90 percent of the profit Tether makes—we will look to reinvest in things that matter to us and our community. We don’t need to give out big chunks of money as dividends.

Some VCs have done a poor job of making character assessments with respect to crypto founders, some of whom—like Sam Bankman-Fried—were later convicted of fraud. How do you plan to ensure Tether doesn’t make the same mistakes?

Looking under every rock and doing the deepest level of due diligence is the only way to save the capital you invest. Not every single investment will be perfect, but we will come into every company with our heart and brain to ensure the maximal result.

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