As the leading stablecoin provider, Tether generated an impressive net profit of $10 billion in 2024. This figure rivals the profits of the world's largest banks, yet Tether operates with a fraction of their staff.
Stablecoins, such as Tether's USDT, are pegged to fiat currencies, such as the U.S. dollar, to maintain a stable value. Centralized issuers, including Tether, ensure this stability by holding cash equivalents, primarily US Treasury bills, for each USDT issued. The interest earned on these reserves is recorded as income. With 140 billion USDT in circulation, this approach has proven highly lucrative for Tether. According to an interview with CEO Paolo Ardoino, more than half of the company's profits will be reinvested in new projects next year.
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$10 billion with 100 employees
By linking to fiat currencies, stablecoins provide a crypto-native dollar that is used as a base currency on exchanges and in decentralized finance (DeFi) protocols. As the crypto market expands, the demand for stablecoins continues to grow. Tether's dominance in this sector is evident, as USDT now accounts for 68% of the total stablecoin market capitalization, which has surpassed $200 billion.
Tether clearly dominates the market, with USDT now accounting for 68% of the total stablecoin market capitalization. Its U.S. competitor Circle has lost market share, which lost it's peg and market confidence after the SVB collapse in March 2023. Despite Tether's murky history, including lawsuits from the U.S. Department of Justice and a lack of audited reserves, the company has maintained a steady peg for years. However, its legal status in Europe faces potential challenges under the MiCA framework.
Strategic presence in the U.S. and Switzerland
Tether continues to grow in key markets, particularly the United States and Switzerland. Howard Lutnick, Trump's nominee for commerce secretary, heads Cantor Fitzgerald, a bank that holds a stake in Tether and manages a significant portion of its reserves. Last month, Lutnick expressed his intention to deepen the business relationship with Tether. With one foot in the White House, Tether is poised for further growth in the United States.
In Switzerland, Tether which originally comes out of Italy, has established a base in Lugano. In March 2022 Tether supported the city with its plans to create another Swiss blockchain hub. Crypto startups were planned to be supported through a $100 million USD fund. A year later, Lugano strengthened its cooperation with Tether through the "Plan B" economic project. Some of Tether's revenue may be returning to the crypto valley, as CEO Ardoino indicated that more than half of the company's net profits will be reinvested next year.
