SoftBank and Ark Invest Join Tether's Ambitious $20 Billion Capital Raise
By: Isha Das
Stablecoin giant Tether is reportedly in the early stages of a massive capital raise, aiming for a total investment between $15 billion to $20 billion. This significant funding round seeks to offer approximately 3% equity through a private placement, potentially valuing the company at an impressive $500 billion. Such a valuation would position Tether among the world's most valuable private companies. Key players such as SoftBank and Ark Invest are in discussions to be part of this ambitious initiative, highlighting the increasing credibility and mainstream acceptance of Tether within the traditional finance sector.
The entry of major investment firms like SoftBank, known for its strategic investments across technology sectors including autonomous vehicles and semiconductors, could accelerate Tether's adoption efforts. SoftBank's recent commitments include a $30 billion investment in OpenAI, underlining its pursuit of transformative technology opportunities. On the other hand, Ark Invest, led by renowned investor Cathie Wood, has positioned itself strategically by investing in Tether's stablecoin competitors, such as Circle. These potential involvement by SoftBank and Ark Invest in Tether's capital raise marks a point of convergence between traditional financial giants and the cryptocurrency sector.
Tether is working towards greater political acceptance, especially in the US, and has recently announced the USAT, a US-compliant stablecoin. Tether's move challenges the dominance of Circle’s USDC in the region’s stablecoin market. In bolstering its strategic positioning, Tether has enlisted Bo Hines, a former adviser under Donald Trump's administration, as its Strategic Advisor for Digital Assets and US strategy. The firm’s association with investment bank Cantor Fitzgerald as an advisor in this fundraising initiative is also noteworthy. Leading this movement, CEO Paolo Ardoino and co-founder Giancarlo Devasini are steering the company through these pivotal developments aimed at securing significant institutional capital.
Tether’s robust revenue model is centered on investing the reserves backing its USDT stablecoin into cash-equivalent assets, such as US Treasuries. This model yields substantial interest, contributing to a reported net income of approximately $4.9 billion for Q2, with a year-to-date total of $5.7 billion. Dominating 63% of the stablecoin market with a supply of $174.2 billion, Tether's ongoing growth underlines the potential impact of this fundraising on the broader crypto landscape. Should this capital raise succeed, it would likely set new precedents for crypto company valuations and further integrate traditional financial institutions into the world of digital currencies.
