How Tether is reshaping commodities finance with crypto-backed lending

Stablecoins are no longer confined to crypto trading platforms. Tether Holdings SA, the issuer of the world’s most circulated stablecoin USDT, is entering the world of physical goods by reshaping how traders finance global shipments of commodities like oil, wheat, and cotton. A Bloomberg report states that with $1.5 billion already issued in loans, the company is transforming a centuries-old system that has traditionally relied on bank credit. This shift comes at a time when traditional lenders are pulling back from certain commodity markets, especially in riskier countries. Tether’s lending programme is filling the void with fast-moving, high-yield credit backed by digital assets. The result is a new form of trade finance that fuses stablecoin liquidity with private credit demand. Trade finance finds a new backer Commodities trading has always depended on credit. Traders typically use loans to pay for cargoes of goods that are in transit, such as crude oil or wheat. These loans are often short-term and denominated in US dollars, repaid once the goods are delivered and sold. However, a series of fraud scandals in recent years has pushed some global banks to reduce exposure in certain markets. That has left a financing gap, especially for smaller firms operating in emerging markets. Tether has stepped in through its Trade Finance unit, which launched in 2022 and is separate from the reserves backing its stablecoins. Since last year, Tether has expanded its lending across key sectors, including agriculture, oil, and soft commodities. It offers credit in both traditional US dollars and USDT, the stablecoin that tracks the value of the dollar. The company says this programme will grow significantly over time. Short cycles and high returns Lending in the commodities space has unique characteristics that attract private credit providers. One key feature is the speed of repayment. A single trade, such as a shipment of wheat across the Atlantic, is usually completed in under 30 days. This short cycle means lenders receive interest quickly and can reissue funds for the next deal. Tether is focusing on regions and clients where banking support is limited. These are often locations where geopolitical risks or a lack of collateral discourage banks from issuing credit. Private lenders can charge higher interest rates to reflect the greater risk. In some cases, these rates reach double digits, making the model highly profitable if loans are repaid on time. With nearly $200 billion in reserves, mostly invested in liquid assets such as US Treasury Bills, Tether has significant capacity to expand its lending portfolio. Bloomberg reports that it expects to generate around $15 billion in profit in 2025, according to CEO Paolo Ardoino. From gold holdings to farm investments Tether is also expanding its role beyond lending. It has built one of the largest private gold reserves globally, excluding national governments and banks. Its gold-backed stablecoin, XAUT, has a market value of nearly $2.2 billion, according to CoinGecko . To strengthen its position in the precious metals market, Tether is hiring two senior traders from HSBC Holdings Plc, according to Bloomberg. This signals a more active strategy in physical commodity management. The company is also investing in production assets. In March, it announced plans to raise its stake in South American agribusiness Adecoagro SA to 70%, a deal worth up to $616 million. By April, commodity trading executive Kyril Louis-Dreyfus joined Adecoagro’s board, giving the company further strategic reach in the agriculture supply chain. Stablecoin adoption drives real-world use Stablecoins like USDT are increasingly being used beyond cryptocurrency exchanges. In Latin America, they are gaining traction for remittances and cross-border payments. The US passing stablecoin legislation in July added further clarity, accelerating adoption in traditional sectors. Tether is leveraging this shift to integrate USDT into real-world finance. By embedding its stablecoin into commodities trade, it combines blockchain efficiency with the scale of physical market operations. This offers faster payments, traceable transactions, and greater access to liquidity for traders who are often locked out of banking systems. The company’s growing role in commodities finance signals a broader change. As digital tokens become more trusted for value transfer, they are starting to fund the flow of goods that feed and power the world. The post How Tether is reshaping commodities finance with crypto-backed lending appeared first on Invezz