According to a Bloomberg report published on September 26th, SoftBank and Ark Invest are in preliminary talks regarding a potential investment in Tether’s upcoming capital raise. This funding round would be the largest external one for the stablecoin issuer.
Tether is reportedly seeking between $15 billion and $20 billion through a private placement, offering approximately 3% equity in exchange. This fundraising initiative could value the company at an impressive $500 billion, potentially ranking Tether among the most highly valued privately held businesses worldwide.
Securing backing from these prominent technology investment firms could significantly accelerate Tether’s push for wider acceptance and bolster its reputation within traditional financial circles.
Investor Insights
Tether has been actively working towards greater acceptance in various markets, notably including the United States. The company recently unveiled USAT, a stablecoin designed to be fully compliant with US regulations. This new offering could potentially challenge USDC, issued by Circle, for dominance in the US stablecoin market.
Further solidifying its US strategy, Tether recently appointed Bo Hines, formerly a crypto advisor to Donald Trump, as its Strategic Advisor for Digital Assets and US Strategy.
SoftBank, a firm based in Tokyo, has a diversified portfolio of technology investments, including data centers, self-driving technology, and semiconductor companies.
Recently, SoftBank committed $30 billion to OpenAI and continues actively seeking promising opportunities in the high-growth technology sector. Meanwhile, Ark Invest, led by Cathie Wood, has previously invested in Circle, a competitor in the stablecoin market.
Cantor Fitzgerald is advising Tether on this fundraising endeavor. This New York-based investment bank, currently led by US Commerce Secretary Howard Lutnick, also provides custodial services for Tether’s reserve assets.
Significant Revenue Generation
Tether generates revenue by investing the reserves that back its USDT stablecoin in liquid, cash-equivalent assets, primarily US Treasury bills. This business model enables the company to earn income on these holdings while maintaining the USDT’s peg to the US dollar.
Tether announced a net profit of around $4.9 billion for the second quarter of the year, bringing its year-to-date profit to $5.7 billion. As of September 25th, USDT dominates the stablecoin landscape, commanding a 63% market share with a supply of $174.2 billion.
Paolo Ardoino, the CEO, and Giancarlo Devasini, a co-founder who serves as chairman and holds the largest ownership stake, are at the helm of the company.
These funding discussions represent Tether’s most ambitious attempt to secure institutional investment since its inception. A successful outcome could establish new valuation standards for crypto-related companies and encourage greater participation from traditional financial institutions in the stablecoin market.