A lot has changed since I hosted Tether CTO Paolo Ardoino on the Invezz podcast last October.
Just a couple of weeks after we spoke, FTX collapsed in a development that few saw coming. Within a couple few days, $3.5 billion of Tether was redeemed as part of a wider collapse in the crypto markets. But for Tether, it all went without a hitch.
This week, Ardoino again joined the podcast to talk through how things have changed since, as well as a variety of other topics in the always-dynamic stablecoin space.
We began by chatting about Lugano, a pretty little city in Switzerland which is one year into Plan B, an initiative that has seen Tether partner with the city to push blockchain adoption.
Paolo pointed out the differences between Lugano and El Salvador, where Bitcoin is full legal tender yet, as I wrote about when I visited last year, has struggled somewhat on the education front.
Lugano is a smaller initiative, Paolo explained, which means it can be developed and fostered easier. I then asked about how easy it was to get merchants to adopt Bitcoin and Tether as a means of payment – another area where El Salvador has struggled.
But this branched off into a wider topic about the developing world and Bitcoin, as well as the strength of the US dollar. As a fellow European, Paolo is well aware of the US dollar’s dominance.
For certain developing nations, the dollar represents an escape route, and the discussion around Tether’s place in offering access to the dollar was fascinating. I’ll let you fill in the dots, but let’s just say that Argentina, Lebanon, Venezuela and Turkey were mentioned.
Aside from the broader discussion about Bitcoin and the developing world, we also touched on the controversy around Tether’s reserves, a story which has evidently frustrated Paolo.
He talked about how Tether unwound its entire commercial paper portfolio in nine months, a staggering $30 billion. It’s a mammoth sum, and we also spoke about the billions of redemption requests in the aftermath of the crypto scandals last year (something which fractional reserves banks would have undoubtedly struggled with).
Paolo discussed the community’s reaction and the decision to wind down commercial paper exposure in favour of T-bills. I asked him whether this T-bill allocation (58% as of most recent numbers, although this may have changed since) would decrease if/when rates come back down. Paolo’s answer was telling – they are a “lean team” that revealed a $700 million profit in Q4 as the rest of the crypto world was reverberating from the FTX meltdown, and hence don’t exactly need the stout yields on offer right now.
Paolo also spoke of criticism levelled towards him and Tether compared to “exciting” or “cooler” CEOs like those who headed up firms like FTX, Celsius, Voyager Digital, to name a few. Of course, none of those CEOs are still around – a point Paolo made sure to point out.
We also touched on regulation and the fact that US regulation has come in hard recently. I asked Paolo what this all meant for Tether, being headquartered outside the US. His thoughts were interesting, as it recently surged past a 50% market share for the first time since 2021 – especially as a fellow European!
This is a flavour of what we touched on, but we bounced around a whole bunch of topics. It’s a very interesting time in the stablecoin market, and the cryptocurrency industry as a whole, so it was a fun chat.
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