Tether Eyes Equity Tokenization After $20 Billion Fundraising Ambitions

Tether isn't just playing with stablecoins anymore. The giant behind USDT is making a power move into the traditional finance arena, exploring how to turn company shares into digital tokens on the blockchain.

From Stablecoin King to Equity Disruptor

This pivot follows whispers of massive fundraising plans—we're talking a staggering $20 billion. That war chest isn't for minting more digital dollars; it's fuel for a much bigger ambition. Tokenizing equity means slicing ownership of real-world assets into tradeable digital tokens, a process that could dismantle decades of Wall Street paperwork and middlemen.

The $20 Billion Bet on a New Market

Forget enabling or facilitating—Tether is aggressively building. The potential scale is monumental. By applying its blockchain expertise to equities, Tether could create a 24/7, borderless market for corporate ownership, bypassing traditional exchanges and their archaic settlement systems. It's a direct challenge to the old guard's fee-heavy model.

A Provocative Step for Crypto's Pragmatic Giant

This isn't just another crypto project. It's a strategic invasion. Tether has the liquidity, the user base, and now, apparently, the capital to make it stick. If successful, it blurs the line between crypto and conventional finance permanently. Sure, Wall Street bankers might scoff at the 'unregulated casino' making a play for their crown jewels—right before they quietly start buying the tokens themselves. The move proves that in finance, the most disruptive ideas often come from the outside, funded by the very system they aim to replace.

TLDR

• Tether is looking at tokenizing its equity as part of a $20 billion fundraising effort.
• The company’s planned valuation could reach $500 billion, positioning Tether among global giants.
• Tether’s Hadron unit launched in 2024 could support tokenization of its equity.
• Existing investors may need alternative liquidity options as Tether plans no immediate IPO.

Tether, the issuer of the world’s largest stablecoin, is reportedly weighing the option of tokenizing its equity following a planned share sale that could raise up to $20 billion. This move comes as Tether aims for a valuation of around $500 billion, according to sources familiar with the matter. Tokenization could serve as an alternative liquidity path for shareholders since Tether currently has no plans for an immediate initial public offering (IPO).

The company’s consideration to tokenize its stock follows its launch of Hadron, a tokenization unit, in late 2024. Hadron aims to mint blockchain-based representations of stocks, bonds, and commodities. If Tether goes ahead with tokenizing its shares, it WOULD likely build on the foundation that Hadron has already established.

Liquidity Options and Buybacks

Tether is reportedly not allowing existing shareholders to sell into its upcoming fundraising round. The company has indicated that the current fundraising will focus on securing investment capital rather than providing liquidity to its existing investors. To address this, Tether executives are considering other methods to ensure liquidity, such as traditional buybacks.

Buybacks, a well-known mechanism in private equity markets, would allow Tether to repurchase shares from existing shareholders after the main fundraising round. Tokenized equity could offer another potential solution, enabling investors to hold digital assets representing their stake in the company. However, as of now, no final decision has been made regarding these options.

Secondary Sales and Valuation Concerns

Tether has also been involved in managing secondary sales of its stock. According to reports, the company intervened to prevent a shareholder from selling their shares at a significantly lower valuation of $280 billion, far below the $500 billion valuation it is targeting in its upcoming fundraising.

Tether’s intervention highlights the company’s efforts to maintain a controlled valuation and fundraising process. The firm issued a statement indicating that attempts to bypass the formal process were deemed “imprudent” and “reckless.” This intervention aims to ensure that the company’s valuation remains intact as it moves forward with its $20 billion share sale.

The Tokenization Trend in Financial Markets

Tether’s consideration of tokenizing its equity comes at a time when tokenization of traditional financial assets is gaining momentum. Although tokenized markets remain small compared to traditional markets, the growth of blockchain-based assets has accelerated in recent years. Tether’s involvement in this space could provide a boost to the trend, potentially creating new pathways for liquidity in private equity markets.

The company’s Hadron unit is already facilitating tokenization for other assets, such as stocks and commodities. This expertise could enable Tether to successfully tokenize its own equity, making it one of the first major companies to experiment with tokenized private stock.

Despite the growing interest in tokenized assets, the broader market for tokenized real-world assets remains relatively small, valued at around $18 billion. Tether’s decision to tokenize its stock could further stimulate interest in this sector.