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Tether Plans $1 Billion Investment in Next 12 Months via Venture Capital Arm

Hassan Shittu
Last updated: | 3 min read
Uphold Ceases Support for Stablecoins Ahead of MiCA Regulations

Tether has announced an ambitious investment plan of over $1 billion through its venture capital arm within the next year.

This is among Tether’s expansion of its financial commitment to fostering innovation in alternative financial infrastructure, artificial intelligence, and biotechnology.

The company’s investment arm, Tether Investments, has already allocated around $2 billion in these areas over the past two years and continues to evaluate hundreds of new pitches monthly.

Tether’s Plan Focus on Financial Infrastructure, AI and Biotech

Tether Holdings Ltd., the company behind the world’s largest stablecoin, USDT, plans to invest over $1 billion through its venture capital arm within the following year.

Chief Executive Officer Paolo Ardoino revealed this ambitious plan in an interview with Bloomberg, stressing Tether’s expanding financial influence and strategic focus on emerging technologies and markets. Tether Investments, the company’s investment arm, currently has a team of 15 who review hundreds of pitches each month, primarily from startups.

According to Ardoino, the team’s focus areas include alternative financial infrastructure for emerging markets, artificial intelligence, and biotechnology. Over the past two years, Tether has already invested approximately $2 billion in these sectors.

This investment strategy illustrates Tether’s growing ambitions and financial capabilities. The USDT stablecoin, designed to track the US dollar one-to-one, has a market capitalization of about $112.4 billion.

Recently, Tether has been investing most of the reserves backing USDT in US Treasury bills and other securities, generating billions of dollars in profits in the current high interest-rate environment. While Tether plans to maintain 100% of its reserves plus an additional 6% cushion from its profits to ensure smooth USDT redemptions, it also aims to allocate some of its remaining profits into strategic investments.

A significant part of this strategy involves investing in infrastructure in emerging markets to enhance its distribution network. Furthermore, Tether has invested over $1 billion in artificial intelligence, including backing data center operator Northern Data Group.

“We can offer AI computing to all the companies we have invested in. It’s all about investing in technology that helps with disintermediation with traditional finance. Less reliance on the big tech companies like Google, Amazon, and Microsoft.”

As per its published attestation, Tether reported a profit of $4.5 billion in the first quarter of this year. While these third-party attestations are not equivalent to full financial audits, they provide a snapshot of the company’s financial health.

Despite past and current regulatory scrutiny concerning the quality and liquidity of the reserves backing stablecoins like USDT, Tether has managed to maintain its peg to the US dollar without major disruptions.

Ardoino emphasized the impact of these profits on Tether’s investment capabilities. He said,

“You can imagine that the news that Tether is making good money went around the world.”

He continued,

“We get tens or hundreds of deals per month that are on the table, and we only end up doing a very small percentage of that.”

Tether Recent Investments

Tether has recently invested $18.75 million in XREX Group to enhance financial inclusion and improve cross-border payments in emerging markets. This investment, supported by notable investors including the Taiwanese Government National Development Fund and SBI Holdings, aims to introduce innovative financial solutions and drive advancements in regulatory technology.

The collaboration with XREX also aims to bolster regulatory technology (RegTech) to detect and prevent illicit use of stablecoins, aligning with Tether’s compliance initiatives.

Tether has also recently invested a significant $200 million in Blackrock Neurotech, a leading biotech company specializing in brain-computer interface (BCI) technology, through its new venture division, Tether Evo.

This strategic move establishes Tether as the majority stakeholder in Blackrock Neurotech, aiming to advance medical solutions for individuals with paralysis, neurological disorders, and lost function.

This move is part of Tether’s broader strategy, which includes a recent major restructuring into four business divisions, which has driven its impressive growth and financial stability.

Despite market and regulatory challenges, Tether remains dominant, with a significant market share and a market cap exceeding $100 billion.