Odd Lots Podcast Summary: Tether's CEO Speaks on His Insanely Profitable Business

Hosted by Tracy Alloway and Joe Weisenthal, Bloomberg's "Odd Lots" delves deep into the intricate world of finance, markets, and economics. In the April 7, 2025 episode titled "Tether's CEO Speaks on His Insanely Profitable Business," the hosts engage with Paolo Ardoino, CEO of Tether, to uncover the strategies, challenges, and future outlook of the world's largest stablecoin.

1. Celebrating a Decade at Bloomberg

[01:00] Tracy Alloway kicks off the episode by celebrating her 10-year anniversary at Bloomberg, reflecting on the journey and the unpredictable evolution of the crypto industry over the past decade.

[01:17]

Tracy Alloway: "It's been a very thoughtful mood a whole decade since Joe tricked me into coming here."

2. The Phenomenal Rise of Tether

The conversation swiftly moves to the exponential growth of the crypto sector, particularly focusing on Tether's ascent.

[02:30] Tracy admits her initial skepticism:

"I first started writing about Bitcoin in 2011, and by 2013, I had written obituaries for it three or four times."

Despite early doubts, Tether emerged as a dominant stablecoin, now owning more U.S. Treasury bills than some countries, showcasing its significant footprint in financial markets.

[03:16]

Joe Weisenthal: "Why would you ever hold a Tether? Many thought the company couldn't continue."

3. Unmatched Profitability and Business Model

Tether's astonishing profitability is a focal point, with the company reportedly making $13 billion in 2024 despite a lean workforce of fewer than 200 employees.

[04:19]

Paolo Ardoino: "I define Tether as a once-in-a-century company... In the last two and a half years, we've made around $20 billion in profits."

Tether's strategy centers on reinvesting 95% of its profits to expand its distribution network and explore ventures in AI, Bitcoin mining, and other global opportunities, demonstrating a commitment to sustained growth over shareholder payouts.

[04:58]

Joe Weisenthel: "This is like one of the most extraordinary, maybe the most profitable business in the history of business."

4. Navigating Regulatory Waters and Audits

The path to profitability wasn't without challenges, especially concerning regulatory scrutiny and the quest for transparent audits.

[09:14]

Paolo Ardoino: "With the past administration, it was not easy to deal with auditors due to aggressive stances against crypto."

Under the new administration, Tether is optimistic about engaging with the Big Four auditing firms to conduct comprehensive audits, striving for full transparency and credibility in the market.

[12:07]

Paolo Ardoino: "We're moving as fast as we can... We've hired a new CFO with extensive audit experience to lead us through this process."

5. Tether's Role: Complement or Competitor to the U.S. Dollar?

A pivotal discussion revolves around whether Tether serves as a complementary asset to the U.S. dollar or poses a competitive threat.

[06:18]

Paolo Ardoino: "We are not a competitor to the U.S. dollar. USDT is a digital dollar backed by U.S. Treasuries, bringing the dollar to emerging markets."

Tether positions itself as a facilitator of financial inclusion, providing millions in developing countries with access to a stable and trusted digital currency, thereby reinforcing the U.S. dollar's global hegemony.

6. Building Infrastructure in Emerging Markets

Tether's strategy involves creating a robust physical and digital infrastructure across emerging regions to ensure widespread adoption and usage.

[24:24]

Paolo Ardoino: "We're investing in kiosks in African villages with solar panels, aiming to scale from 300 to 100,000 kiosks by 2030 to serve 60 million people."

This initiative not only promotes the use of USDT but also contributes to essential services like electricity access, demonstrating Tether's commitment to holistic community development.

7. Compliance, Investigations, and Law Enforcement Collaboration

Tether places a strong emphasis on compliance and collaboration with law enforcement, ensuring that its operations remain transparent and secure.

[33:35]

Paolo Ardoino: "We have an internal investigations team of 20-30 people and work with top blockchain analytics firms like Chainalysis and TRM Labs."

An illustrative example includes Tether's role in uncovering and freezing assets linked to a $220 million pig butchering scam, highlighting their proactive stance in combating illicit activities.

[34:59]

Paolo Ardoino: "We found the scam and worked with law enforcement to freeze $220 million in assets, ensuring funds were returned to legitimate owners."

8. Adapting to Potential Regulatory Changes: The Genius Act

The introduction of the Genius Act presents new regulatory landscapes for stablecoins. Tether is exploring the possibility of launching a domestic U.S.-based stablecoin tailored for institutional use while continuing its international operations.

[30:38]

Paolo Ardoino: "We're discussing the opportunity to create a domestic U.S. stablecoin, which would differ in product-market fit from our current offerings."

This dual approach allows Tether to cater to both the vast, underserved populations in emerging markets and the structured, institutional needs within the U.S.

9. Future Prospects and Risk Management

Looking ahead, Tether is keen on diversifying its reserves while maintaining a strong commitment to stability and trust.

[40:53]

Paolo Ardoino: "Our reserves primarily consist of U.S. Treasuries, supplemented by gold and Bitcoin to meet diverse market demands."

The CEO underscores the importance of risk management, ensuring that even in adverse scenarios, the company remains financially robust.

[42:09]

Paolo Ardoino: "The biggest risk is ensuring global understanding and acceptance of stablecoins, allowing us to financially include billions without failure."

10. Conclusion: Tether's Indelible Mark on Global Finance

As the episode wraps up, hosts reflect on Tether's transformative impact on global finance, recognizing its role in bridging financial gaps and reinforcing the U.S. dollar's international standing.

[45:28]

Tracy Alloway: "We're in a world where stablecoins are so large... preparing for stablecoins to become even bigger."

Joe Weisenthel offers a critical yet intrigued perspective on Tether's business model, acknowledging both its simplicity and inherent profitability.

[46:34]

Joe Weisenthel: "It's so sickly profitable... they're literally printing money."

Key Takeaways:

• Tether's Dominance: As the largest stablecoin, Tether has grown from issuing $100 million to $144 billion in tokens, owning significant U.S. Treasury assets.

• Exceptional Profitability: With profits soaring into the billions and minimal employee count, Tether showcases an unparalleled business model in the financial sector.

• Regulatory Navigation: Tether is poised to embrace increased regulatory scrutiny, leveraging the new administration's favorable stance to secure comprehensive audits.

• Global Financial Inclusion: By establishing infrastructure in emerging markets, Tether not only promotes the use of the U.S. dollar but also contributes to essential services, fostering financial stability in volatile economies.

• Robust Compliance: Dedicated investigations and collaboration with law enforcement ensure that Tether remains a trustworthy entity in the crypto space.

• Future Expansion: Potential launches under new regulatory frameworks like the Genius Act indicate Tether's intent to diversify and cater to both global and domestic markets.

Notable Quotes:

• "We are the best ally for the United States is the company." — Paolo Ardoino [06:18]

• "Tether never refused a redemption. Tether never failed to redeem at $1 each token." — Paolo Ardoino [15:21]

• "The biggest risk is ensuring global understanding and acceptance of stablecoins." — Paolo Ardoino [42:09]

For further insights and in-depth discussions on finance and the evolving crypto landscape, tune into Bloomberg's "Odd Lots" podcast every Monday and Thursday.