Tether's CEO Speaks on His Insanely Profitable Business

Summary

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.

Transcript

[KPMG]

KPMG makes the difference by creating value like developing strategic insights that help drive M and a success or embedding AI solutions into your business to sustain competitive advantage. KPMG make the difference. Learn more at www.kpmg.us.

[Thrivent]

Insights Thrivent can help you plan your finances for the people, causes and community you love. What makes Thrivent different? Financial services and generosity programs are combined to help you build a financial roadmap for the future, while also creating opportunities to give back along the way. Visit thrivent.com to learn more. Where Money Means More.

[KPMG]

Bloomberg Audio Studios Podcasts Radio News.

[Tracy Alloway]

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

[Joe Weisenthal]

And I'm Jo Wiesenthal.

[Tracy Alloway]

Jo, it is April here in New York. That's right, it is my 10 year anniversary at Bloomberg this month. This month?

[Joe Weisenthal]

Oh, that's awesome. You're gonna get a pylon. That's great.

[Tracy Alloway]

It's put me in a very thoughtful mood a whole decade since Joe tricked Slash enticed me into coming here. So thank you. Joe.

[Joe Weisenthal]

Are you happy that about. Are you happy about how it all worked out? I did try that.

[Tracy Alloway]

I can't complain.

[Joe Weisenthal]

Okay, good, good.

[Tracy Alloway]

I will say it was a bit rocky in the beginning, but we worked it out.

[Joe Weisenthal]

Where's this going?

[Tracy Alloway]

Okay, in that 10 years, a lot of things that I would never have expected to happen have happened.

[Joe Weisenthal]

Yes, go on.

[Tracy Alloway]

One of them is the phenomenal growth of the crypto industry. So I first started writing about Bitcoin in 2011, and I will openly admit that I think by like 2013, I had written, I think like three or four obituaries for Bitcoin as well. So, you know, I got that wrong, clearly. But one of the other things I got wrong on crypto is the phenomenal growth of stablecoins. So you look at something like Tether, the world's biggest stablecoin. We talk about it in the same sentence nowadays as Euro dollars, for instance. And the company itself is this huge player in financial markets. Like, it owns more T bills nowadays than some countries, which is all pretty amazing.

[Joe Weisenthal]

Well, let's be honest for a second here. You know, you might have thought that Tether wouldn't even exist at this point because it had a reputation for years and years. Like, they're a bunch of scammers, they can't pass an audit, the money isn't there, et cetera. It's going to go away. Why would you ever hold a tether? We asked Sam Bankman Fried that years ago why would you hold a Tether when there are other companies that have done audits, et cetera? There are many people, not only setting aside the size, setting aside all of the assets that it owns, that backs the, you know, the world's most popular stablecoin. There are many people who just thought, this company can't continue.

[Tracy Alloway]

Oh, totally. The other thing I thought was that U.S. officials were never going to grow comfortable with the idea of a loosely regulated foreign company creating synthetic dollars. But, you know, the Trump administration seems to have some other ideas, so we should talk about all of that.

[Joe Weisenthal]

Let's do it. We have the perfect guest.

[Tracy Alloway]

We do have the perfect guest. We're going to be speaking with Tether CEO Paolo Arduino. He is, of course, the head of the world's largest, largest stablecoin. So, Paolo, thank you so much for coming on the show.

[Paolo Arduino]

Thank you for having me. I'm very excited to be here today.

[Tracy Alloway]

So just to begin, has Tether's growth surprised you? Did you ever expect to ramp up to this degree?

[Paolo Arduino]

So I joined Tether very early, was early 2015, just after a couple of months that was actually created and we were discussing internally, myself and Giancarlo, and we were asking ourselves the biggest number we could think about in terms of growth and projection of growth of our stablecoin was between $100 million and $1 billion. And now today is $144 billion in total issued tokens. So we are incredibly excited, we are impressed ourselves. But I must say that it's all happened organically over a decade.

[Joe Weisenthal]

The stablecoin business is so sick, it seems to me, right, because you hold all of these assets that back one tokens that move on blockchains, and you collect all this interest and the holders of the coins don't collect any interest. According to a release on Tether's own website, you made $13 billion in 2024. Various estimates have your total employees somewhere a little bit below 200. So that makes per profit employees somewhere close to 90 million per employee. Like, that's basically correct math that this is like one of the most extraordinary, maybe the most profitable business in the history of business.

[Paolo Arduino]

Yeah, I think it's definitely extraordinary. I defined Tether once in a century company because of the capital that we have given our profits. In the last two years and a half, we made around 20 billion in profits. And we almost distributed. Well, we distributed a very, very tiny part to their shareholders. I mean, I name another company, another fund or whatever that distributed less than, I know, 10% or probably even less than 5 of profits to their own shareholders. So that is something that is unprecedented. And it's, you know, it's set in tether to be able to reinvest 95% of its profits in keeping growing its distribution network for the US dollar and also invest in other pretty cool things from artificial intelligence, bitcoin mining and tens of other opportunities around the world.

[Tracy Alloway]

So you mentioned distribution of the US dollar and there is some tension there, right? I mentioned earlier that I never thought regulators were going to be o with someone basically creating a synthetic dollar that can trade around the world. But times have changed and some things are shifting on the regulatory front. But are you a competitor to the US dollar? Plenty of people would say you are. Or are you something that perhaps complements it?

[Paolo Arduino]

I don't think we are a competitor to the US dollar. USDT is a digital dollar that is backed for most of it by US Treasuries. We are bringing the US out there in the emerging markets in developing countries. We have as of today more than 400 million users. Actually will be 550 million users. I'd like to be a bit more conservative to avoid double counting users. So I would say more than 400 million users. We grow at the pace of 30 million new users per quarter. That is again, we are not Facebook. We are just a digital dollar. So it's really unprecedented and staggering. The reason why we are interesting for the United States and the regul are now appreciating who we are and what we are doing is the fact that we have been building the biggest distribution network for US dollar in a physical form, in a digital form. We have millions of touch points around the world in the emerging markets. We never approached our distribution going through institutions in the emerging markets, but we built physical infrastructure from kiosks in villages in Africa to bodegas in central South America. And again we are just distributing a digital dollar. And look, the reality is that the US dollar hegemony is very, very important for United States. And when we are in Africa, when we are in central South America, there is not much US presence. There is actually there is present apart maybe McDonald's but in some countries in central South America the actual presence of infrastructure in the United States is not there. So what Tata is doing in those countries is purely building that infrastructure and trying to in a way combat actually more than in a way it's. We are I think the last stronghold before the very strong push towards de dollarization made by the BRICS countries. So we see for example, that in central South America or in Africa there are hospitals, schools, libraries and airports that are building the built by China. And again, there is an interest from the BRICS countries to launch a digital currency backed by gold. Plus they are building an infrastructure in these countries. So all the employees, all the people that will rotate and gravitate around these new infrastructures built by BRICS countries will start using something that is not the US dollar. So I think it's becoming very, very clear that actually tether is the best ally for the United States is the company. When we are also in these countries, we are not seeing NGOs, we are not seeing charities. We are the company that also solved or is solving financial inclusion in the strongest way possible.

[Tracy Alloway]

Joe, I gotta say it's a little bit depressing that you know a company that was founded by an Italian in Europe incorporated in the bvi. Although I think you're moving to El Salvador.

[Paolo Arduino]

Correct.

[Tracy Alloway]

Is the ambassador for US business is.

[Joe Weisenthal]

The bulwark the bulwark against the end of the dollar. Yeah, well, history can be funny in that respect. Why haven't you ever been audited?

[Paolo Arduino]

So with the past administration last four years, I must say that was not easy to deal with the past again administration. So I remember Senator Warren sending letters around to different organizations. There was a case of the operation chalk point 2.0 that was very aggressive towards the banking industry that was supporting cryptocurrency companies on the other side. That letter also scared away and was targeted towards the big four auditing firms and other auditors that were then disincentivized to go against the will, the strong will of an administration that was really against crypto in general.

[Joe Weisenthal]

Just real quickly. So obviously you hold your money or a lot of your. The assets that you hold are with Cantor Fitzgerald, its former CEO Howard Lutnick, now the Commerce Secretary friendly with the administration. There has been this changing of the guardian. Has the changing of the guard at the administration level had any bearing on the reason that you're here in New York City and comfortable visiting the US.

[Paolo Arduino]

So I have been always comfortable to visit the US but you want usually to go where what you are doing for 97% of your time or well, 80% of your time given I sleep only a few hours is being accepted and is not considered a very bad thing by the administration.

[Joe Weisenthal]

Right.

[Paolo Arduino]

So you want to deal with people that support what you are doing. At least they have the will to understand what you are doing. So actually the change in administration is what is making possible for us For Tether and other many cryptocurrency related companies to start to deal with the big four auditing firms. We are in discussions, we have multiple discussions on the topic of audit. We hired a new CFO a couple of months ago. He's great. Simon went through multiple contentious full audit across his entire career. I don't think that their audit should be contentious, but given again the complexity and the new field that is CryptoWorld is possibly one correct term and adjective that Decta could use here. And look, we are very positive that the full audit is our top priority and I'm pretty confident that we're going to make it.

[Tracy Alloway]

So just to be clear on the regulatory point, things are changing. As you just mentioned and previously there was regulatory pressure on the big accounting firms to not work with you. That seems to be going away. That's going to allow you to do an audit. Do you have a time frame for when you might do that?

[Paolo Arduino]

So in the past we committed a few times and we provided timelines that were not realistic because of the fact that as I said, the administration really doubled down on trying to kill an entire industry. That was very, very sad to see. So again, we are moving as fast as we can. There is of course some change that is still need among the big four auditing firms. So while they are getting more comfortable, look, the administration changed only two months ago, so give them a little bit of time to get comfortable and we are providing all the. We are again already in discussion. So it's crazy. The administration changed two months ago and we are already in discussions with big four auditing firms. So that is the best thing that I can say. And again, the fact that we hired a new CFO and that has, you know, the highest experience in the sector to get through audits is something that should reinvigorate our position.

[KPMG]

KPMG makes the difference by creating value like developing strategic insights that help drive M and A success and embedding AI solutions into your business to sustain competitive advantage or deploying tech enabled audits to deliver more accurate and transparent outcomes. Brighter insights, bolder solutions, better outcomes. It's how KPMG makes the difference every day. KPMG make the difference. Learn more at www.kpmg.us insights.

[Canva]

People endure presentations, but they engage with Canva presentations. You click through a normal presentation. You impress with a Canva presentation. With Canva you can use AI to instantly elevate your presentation, generating slides and text in seconds with a simple prompt. Dynamic, visually imaginative difference making slides Canva presentations Provides everything you need to build your deck. So you never need to switch between apps. Just focus on what you're doing. You can drag and drop images, graphics, charts and data from Canva's media library, or add animations and interactive elements to engage your audience. It's all right there for you. Canva makes collaboration simple too. And everyone knows presentations are a team effort. Comments, reactions and version control are designed to help teams work together better, working from stunning templates. You don't need to be a designer to make it look great. It's just a smarter way to build a better looking deck. You'll love the presentations you can easily design with Canva. Your clients and co workers will too love your work with canva [e-mail] what's.

[Tracy Alloway]

The complexity of doing an audit for a business like Tether? I've always wanted to ask this question. So you know, you need a professional accounting firm to do this because you want to give people who use Tether investors some sense of safety and stability and truth in what you're portraying. But at the same time it seems like, you know, you should have a pretty good idea.

[Joe Weisenthal]

It seems simple. You just count up the Treasuries and count up tokens and if they match, what are we missing here?

[Paolo Arduino]

I agree with that. In fact, the problem I don't think is about the complexity of going through our reserves because as we said, we keep the majority, the vast, vast majority of our Treasuries in counterfeit. Gerald, that is a very highly regulated financial institution here in the US I think that the confidence in the industry, in the digital assets industry is growing among the big four auditing firms. And look on the other side, you can go on blockchains. And blockchains are very, very transparent. So you can count the liabilities through the transparency of the blockchain and on the other side you can just independently contact our custodians. I think that what we expect from the full audit is also confirmation of our good practices that we have within the company in terms of controls and safety and proper management, for example, the private keys and all that stuff. So that's a process that we want to make sure that we go in the deepest details possible with the our auditors because there is nothing that excites me more than prove that we were always right. We had our lightning 2024 going out there saying Tether has the money. We are releasing a quarterly attestation from a very reputable auditing firm called bdo. They are international, so there are many, many different independent validators of our research. But you know, we just want to get the full don Circle, one of.

[Joe Weisenthal]

Your competitors holds its money in a money market mutual fund from BlackRock called the Circle Reserve Fund. What is the advantage of going out and acquiring cusips of various flavors directly such that you are a direct holder of Treasuries rather than outsourcing it like that. Here's an institution, blackrock, they set up a money market mutual fund that you could just buy into and not have to think about that part. Why the preference towards the direct holdings of the bills and bonds?

[Paolo Arduino]

So that's a good question. So we prefer to have a direct control over the process and we do that through counterfeit Gerald. Also having that direct control allows us to have access to the infinitely liquid repo market. So we think that is in case of huge pressure from the markets and huge redemption pressure. Our facility is much better than anything else attempted by our competitors. Look, think about in 2023 our major competitors had and a big issue with Silicon Valley Bank. They capped uninsured cash deposits there. In 2022, Tether was attacked by funds that were clearly trying to cause a bank run on on usdt. They tried. They amassed billions and billions and billions of USDT just to try to sell them under par on the secondary markets on the different cryptocurrency exchanges. Again, Tether never refused a redemption. Tether never failed to redeem at $1 each token. But at that time when that happened, these short sellers were trying to just cause a bank run. And so what happened is that Tether was able to redeem $7 billion in 48 hours and the $20 billion in 25 days. So $7 billion were 10% of our reserves and $20 billion were around 20 something percent of our reserves. So I mean if you look at Washington, Moodwell and many other banks that failed from 2008 and after, there was no bank that was able to support the 10% bank run. And we did it with flying colors. We could have gone to till the end. That's what means to have a proper repo market and very deep liquid market for Treasuries. We keep all Treasuries that are basically three months in duration, 90 days. So I think we built the best facility for handling any sort of redemption and provide the proper amount of trust that our users need around the world.

[Tracy Alloway]

So you made it through 2022. It must have still been fairly traumatizing or scary at the time to have that much withdrawal pressure on the business. Have you changed any of your redemption policies since then or perhaps instituted, I don't know, new risk management around the peg point.

[Paolo Arduino]

So the concept of PEG is interesting, right? People refer to the PEG as, you know, if USDT or another stablecoin trades 2, 3 basis points or 10 basis points below $1 on secondary markets, that is not the peg. The PEG is our ability, the official PEG of USDT is our ability to redeem every token that can be sent to our primary market. That is our platform to $1. So we always red every single token at $1. So if someone on the secondary markets try to short it and sell it 1%, 2% under par, that is a completely different thing. It does not mean that there is an actual issue. In fact, we demonstrated that we were able, even when we were attacked in a very heavy way that would have destroyed every single company, every single financial institution in this world. We survived and very well. So actually we had still ptsd, I must say, after, after that event. But I think that really reinforces our commitment to transparency. It's funny because first we were accused to not be transparent enough and then when we are now very transparent and we are also saying how much money we are making, people get upset because we are making too much money. So it's quite interesting how it can go both ways. But look now I think that there is no doubt that Tether has In this moment $144 billion in issued outstanding tokens and around $164 billion in excess equity across the group. So it' so we have $20 billion in in proprietary capital within the company among which seven are specific. Seven billion are specifically to the last attestation where specifically are specifically attributed to the excess reserves of the stablecoin. But again, the group has $20 billion in additional equity. So it's very rare that you see a company like this. And so yes, we want also the fact that we basically took out very small amount of dividends prove the fact that for us the safety of our ecosystem, the safety of our company is paramount. And if you look at our other competitors, they keep, you know, some peanuts on top of their reserves.

[Joe Weisenthal]

You mentioned people complain about, oh, you're making so much money and you know, look, people are always going to whine about other people doing well, I get that. But I can think of one group that might genuinely have an eye on the profits and that is institutional traders of crypto. And the question I have is you have this amazing business model where you collect all this yield on your Treasuries and none of it remits. And how long can that last? Because I would imagine that if I were some hedge fund or if I were some high frequency trading shop, et cetera, I would not want to be holding this token. If I were holding a dollar even for a minute, I would put it in some sort of money market mutual fund, collect a day's worth of yield, whatever. You're not going to leave that in a non interest bearing asset even for 10 seconds. Do you believe that the business model, the margin between holdings and what you pay out can sustain itself with competition or will it inevitably compress?

[Paolo Arduino]

So you make a very good point. But I think that the issue there is that you would be right if stablecoins in general would be a product made for the United States. Stablecoins are not a product made for United States. Sure, stablecoins can work in the United States. Stablecoin can be used as a faster settlement system across the interbanking settlement system. But the reality is that Tether never focused on institutions. You know, institutions would betray you for one basis point. They would go, you know, they would do they want, as you said, to use money market funds to maximize their returns. That is fair, that is normal. But. So Tether built the biggest distribution network for US dollar in the emerging markets in developing countries where if you think about Turkey, if you think about Argentina, if you think about other countries, the national currency of these places has been devaluating very, very fast against the US dollar. So in Argentina, I think that peso Argentina last 1012 years devaluated 98% against the US dollar and the Turkish lir devaluated 80% against the US dollar in the last few years. So last year in 2020.

[Joe Weisenthal]

So you're saying that 4% doesn't matter?

[Paolo Arduino]

Yes, because the intraday volatility over their national currency is higher than 4%. So why does it matter to them? And they will stay with you, they will be loyal with you as long as you can prove them that you have the solid product they can trust for their family savings. And by the way, 40% of all the USDT holders are using USDT for savings. So that because we have people that live in Nigeria and emerging markets that need that as a lifeline against the devaluation of their national currency and inflation in their countries.

[Tracy Alloway]

I take the point that Tether is not necessarily aimed at the US but at the same time there are rumors, there are always rumors swirling around about big global companies like an Amazon, maybe a Walmart rolling out some sort of payment system or maybe a stablecoin competitor. And I think one interesting thing that's been happening lately is we've seen some retailers actually joining forces with crypto to try to lobby for the stablecoin bill, which is interesting. They're trying to reduce their swipe fees, I guess. Do you worry about that kind of competition coming in and potentially taking some market share from your business model?

[Paolo Arduino]

Again, the countries where we operate and where we are more successful is the US Top codes are not necessarily that present. As I said, Tether invested half of his portfolio and half of its own equity. So outside of the reserves of the stablecoin, we invested in building our distribution network. So we are building millions of touch points in across the world. You know, one interesting example is, you know, we came across the concept. Well, we. There is a clear statistic that 600 million people in Africa don't have electricity at home, but they have smartphones, they have small televisions and few other things. So what we are doing now is we are investing a company that is building kiosks in villages in Africa with solar panels on top and they sell or they rent batteries for 3 US per month. So with 3 USDT per month, you can swap the battery four times per month, so once per week. Now the average salary of salary of a person in Africa is around $80. And so this is like three USDT are, you know, a good compromise to have electricity at home with these very good batteries. So this is an example how we and we have already 300 kiosks. We are planning to ramp up to 10,000 kiosks by the end of 2026 and 100,000 kiosks by the end Of 2030. So the idea is that by 20 we can serve around 60 million people in Africa that will be running on USDT as their main currency. So we are actually converting people to get on the US dollar. That's why I say that we are the best friends for and best aligned for the US Dollar Germany. And just to finish, we have with that company, not only we are changing the and we're pushing the adoption of the US dollar. It's a great example of a change that you will see from space because if you see Africa is very dark during the night because they don't have electricity, but if you power up 60 million people, that will change. And that is a significant change.

[KPMG]

KPMG makes the difference by creating value like developing strategic insights that help drive M and A success and embedding AI solutions into your business to sustain competitive advantage or deploying tech enabled audits to deliver more accurate and transparent outcomes. Brighter insights Bolder solutions Better outcomes. It's how KPMG makes the difference every day. KPMG make the difference. Learn more at www.kpmg.us insights.

[Canva]

People endure presentations, but they engage with Canva presentations. You click through a normal presentation you impress with a Canva presentation. With Canva you can use AI to instantly elevate your presentation, generating slides and text in seconds with a simple prompt. Dynamic, visually imaginative difference making slides Canva Presentations provides everything you need to build your deck so you never need to switch between apps. Just focus on what you're doing. You can drag and drop images, graphics, charts and data from Canva's media library, or add animations and interactive elements to engage your audience. It's all right there for you. Canva makes collaboration simple too, and everyone knows presentations are a team effort. Comments, reactions and version control are designed to help teams work together better, working from stunning templates. You don't need to be a designer to make it look great, great. It's just a smarter way to build a better looking deck. You'll love the presentations you can easily design with Canva. Your clients and co workers will too love your work with Canva presentations. @canva.com There is an effort right now.

[Joe Weisenthal]

To regulate stablecoins in the law, et cetera if this passes. There's something called the stablecoin legislation, the Genius Act I think it's called. And who can issue a stablecoin a federal qualified non bank payment Stablecoin something by the occ.

[Tracy Alloway]

The Genius act for stablecoins for Stable Geniuses.

[Joe Weisenthal]

Yeah, the state. Yeah, right. The subsidiary of an insured depository institution. A state qualified payment Stable coin. If something like this were to pass, you're talking about, you know your priority has really never been the United States. You're talking about Africa, you're talking about Turkey, you're talking about Argentina. Places that have seen significant devaluation. Would you register in the United States as a stablecoin under this law or would you choose to just like you know what the US as it were our activities.

[Paolo Arduino]

Right. So let me elaborate on the answer is is has multiple point of views. So first of all we really appreciate keep in mind that being the company that created the Stablecoin industry in 2014 is a big owner that now lawmakers in the most powerful country in the world are looking at our technology and want to regulate it. So we are very very excited for that. Second, the law and the GENIUS act is a very well done piece of law and it allows few things. First of all, Tether could consider to create a domestic US based stablecoin. The difference is that a US domestic stablecoin would go towards would be used more for institutions. So the product market fit is completely different than a stablecoin that is used in kiosks in Africa. Right.

[Joe Weisenthal]

So this would be actually like a coin that might have a different ticker. It wouldn't be usdt.

[Paolo Arduino]

Yes, we are, we are discussing about that opportunity, that possibility. I mean look, we need to wait for the final language and to see which bill will pass, but definitely we are open to that. Tether is we discussed before about law enforcement regulations and all that Tether. Not many know this but Tether is the only stable coin only also including the US based stable coins that onboard the FBI, United States Secret Services. We work daily with the Department of Justice and the other organizations within the US we worked on more than 400 operations with US law enforcement across the globe. We work with 230 law enforcement agencies across across 50 different countries. So when in the proposed genius act there is the requirement of stablecoins, even foreign stable coins because USDT would remain potentially an international stablecoin. We would be very happy to continue our collaboration and see in the written requirement of a collaboration with US law enforcement that we think is sensible. And everyone now on on at least on X knows this. We are the fastest responder to law enforcement requests compared to competition. We don't wait for court orders that allows criminals to get away with it and move funds very quickly. We immediately act upon contacting being contacted by law enforcement. But on top of that, among our people we have probably the most impressive investigation team in the entire industry also across again also across traditional finance. In fact just a couple of weeks ago there was the freezing of Garantex. That was a cryptocurrency exchange sanctioned a Russian one. And we worked for months with the Department of Justice to find the right way to do it. The right process is like is a very good collaboration. We received I think a couple of weeks ago a thank you, a public thank you note for our productivity in our collaboration with the Department of Justice. So this is how we are comfortable. So we believe that no matter if you are an international stablecoin or your domestic stablecoin you need to work within the US parameters of sanctions and law enforcement. So. So we believe that it's important foreign stablecoins to work with US law enforcement. But at the same time the US domestic stablecoins and foreign stablecoins have different value proposition. One is for people that are left behind by the banking system. Because there are 3 billion people that are unbanked, they cannot afford to pay $150 per year in banking fees. And those. I mean, I'm pretty sure that if you ask JP Morgan how many customers that they would want from our user base, they would say probably 4, not 400 million. Just because our customers all singularly are too poor of a being of their interest. But that's something very unique to tether. In the US you would need different use cases for stablecoins because you have Zelle, PayPal, CashApp and 600 gazillion ways to pay each other.

[Tracy Alloway]

How big is your investigations team?

[Paolo Arduino]

So we have a specific internal investigations team that is between 20 and 30 people plus a very big compliance team. And then on top of that, we have been contracting and working with the leaders in the space when it comes to blockchain analytics. So we borrow also external investigations team and ecosystem monitoring tools. We work with chainalysis TRM Labs. We recently announced a huge freeze working with TRM Labs related to the BYBIT and CK and so on. So again, I think that there is no doubt that Tether has the highest standard when it comes to compliance and investigation within the cryptocurrency industry, but. And the digital asset industry, but also above and beyond.

[Tracy Alloway]

So on this topic of cooperating with law enforcement, this is something I always wondered about crypto in general. But part of the selling point is anonymous transactions, right? And it's not even necessarily that you need an anonymous transaction in order to do something nefarious like buy drugs or whatever. You might just want one for something like, I don't know, a husband buying his wife a birthday present and he doesn't want her to see it or whatever. Anonymity is part of the selling point here for some of your customers. And yet at the same time, we always hear that the transactions are traceable. You're cooperating with law enforcement. How do you sort of square that tension?

[Paolo Arduino]

So here's the thing, right? So, sure, blockchains are transparent, and they're not necessarily anonymous. They're pseudonymous. So with proper ecosystem monitoring tools, and we spent 10 years to perfect this, we can trace transactions. We can prove that criminals are found and punished. Let me give you an example. I think less than one year ago, our internal investigation team started to follow certain transactions. And they got some alerts from our triggers and configurations of our monitoring systems. And we found out that there was a potential pig butchering network that was converting or using usdt, and that was on all the newspapers then eventually. But it ended up that Tether was the company that initially found out that there was this peak butchering scheme and then contacted law enforcement. And we all, together with law enforcement, we conducted the investigation and we decided to freeze these assets. These assets amounted to $220 million. Now, all on the newspapers there was the headline, oh, USDT is being used by the pig batchers. But actually not many understand the actual process. So pig butchering or a romance scam happens when you might have a girl contacting a guy online asking for some money to pay the rent and whatever. It's crazy that this amounted to $200 million, but it is what it is. But this girl that contacts the guy will not ask for USDT will ask for a, you know, payment through a payment processor. They will usually send a link. So there is a guy that will swipe its card or input the car numbers on a website to do a payment to what he thinks is a nice girl. And then that payment goes through another payment processor, then goes to a cryptocurrency exchange and that gets converted to USDT and moved on chain. So, so three different opportunities failed in the traditional financial system when the credit cards is being swiped and then the payment processor fails to recognize the issue and all that. So three times people and institutions fail to freeze that transaction and recover the funds. And then when it gets to usdt, we find it out and we freeze it and we can return the money to the legitimate owners. So that is the headline that should have been there because it's the right one, is the correct one.

[Joe Weisenthal]

That all makes sense to me. However, the definition of what's criminal can be a spectrum. It can change by culture, it can change by time. So for example, in the US it's illegal to deal drugs, but in another country it may be illegal to distribute bibles or distribute condoms to an NGO or anything like that. There are also certain circumstances in which capital flight could be considered a crime. And when you talk about some of these countries with intense devaluation of their currencies, I could imagine a foreign minister in one of these EM countries saying tether is contributing to capital flight because our own citizens, they're making it easier. It's making it very easy for them to move their dollar assets, to acquire dollar assets in a way that we would never allow through our traditional regulated banking system. You talk about working with law enforcement. What if a law enforcement Agency within one of these countries says no, like we do not want our population swapping our currency to be able to hold dollar assets.

[Paolo Arduino]

Very good point. So first of all, it's a matter of education, right? I met with Finance Minister last year and I thought, walking in that meeting I thought, well, he will be very annoyed for what we are doing. I will not name the country, but I thought that, that and then I went there and actually, and that was something that I was going to explain to him anyway. But actually what we agreed on is that sure, many people in those countries are using USDT to fly and fight inflation and the devaluation of their national currencies. But on the other side, there are billions of dollars that are flowing in in the form of USDT for remittances. So actually USDT is counterbalancing those outflows, if you will, with the new inflows and new, faster and cheaper inflows when it comes to remittances. So the average percentage of a GDP of an emerging market when it comes to remittances is 20% for Philippines is $33 billion per year. And if you look at many other emerging markets, 20% is probably the low bar. There are countries that have 40, 50, 60, 80% of the GDP is remittances. So actually we make remittances cheaper because if you look at the tradition remittances companies, they charge from 6 to 28% to move money internationally. So that is something that really well resonates with, with other country prime ministers, with institutions in these countries and so on. So in our point of view, we need to work primarily with US law enforcement and with Europe law enforcement. And we tend to not work with the tyrannical countries. Law enforcement.

[Joe Weisenthal]

Okay.

[Tracy Alloway]

So we started this conversation talking about how big you've grown and you know, I mentioned you are an actual presence in the treasury market nowadays, in the repo market, as your holdings get larger, would you ever be tempted to maybe. I don't know if it. Invest is the right word, but invest, trade a little bit more, maybe extend into slightly riskier assets. Bitcoin, I don't know. Do you diversify?

[Paolo Arduino]

So our reserves are in the majority, quite high, majority of US Treasuries. Short term we have a bit of gold and we have a bit of Bitcoin. The reason for that is that there is in the emerging markets, developing countries, those other two things are very well respected and of much interest at the same time. That's why also we keep very good amount of Billions within the excess reserves to also prove to everyone that we are not here to speculate. We have the entire risk management very solid. Even if Bitcoin was going to zero, the company would still have several billion dollars in excess equity. So that's the message we want to give. I mean, if it is important to perfect a product that is very interesting for the audience, but at the same time prove that you are solid, that you're strong. And again, we are very happy to see regulations moving towards the reinforcement of what could be held in reserves by stablecoins.

[Tracy Alloway]

So summing it all up again, the company has grown quite a lot an actual presence in traditional financial markets nowadays. What's the biggest risk to your business nowadays? This is such a cliche, but what keeps you up at night? What do you worry about?

[Paolo Arduino]

Yes, could be. I mean I'm sure that, that this will sound like an obvious and well crafted. Well, I'm sorry. Well, maybe not well crafted, but nevertheless, I think that I want to keep going doing what I have been doing and what my team has been doing for the last 10 years. The biggest risk to me is that for one reason or the other, for example, the US or other countries don't understand the opportunity, the potential of a stablecoin industry when it comes to tether. I think that really in the last month we have been taking so many meetings within the Hill and everyone has been incredibly receptive. So now there is proper education, understanding what we are doing. But what keeps me up at night is simply the fact that we have the biggest opportunity in the history of humanity to actually include billions of people in the financial world. And I don't want to fail.

[Joe Weisenthal]

Very, very high minded. I was going to real quick question. Are you talking with other Wall street banks diversifying away from Cantor Fitzgerald or is that going to be the only bank where you hold your treasury assets?

[Paolo Arduino]

So Treasuries are. And the beauty and the difference between holding Treasuries and holding uninsured cash deposits as our competitors is that if anything happens, you can take your securities and move them anywhere else. Right. So it's a very easy and clean process. But I must say that Cantor Fitzgerald is the best company that believed in this industry already two, three years ago when no one else understood this industry two, three years ago. So we are very respectful, our relationship.

[Tracy Alloway]

Plus you have a friend in the White House, right?

[Paolo Arduino]

Howard is a great guy, but I'm not allowed to talk to him.

[Joe Weisenthal]

Okay.

[Tracy Alloway]

Okay.

[Joe Weisenthal]

Oh, really good to know.

[Tracy Alloway]

All right. Paolo, thank you so much for coming on odd lots.

[Paolo Arduino]

Thank you for having me. It was very exciting.

[Joe Weisenthal]

That was very fun. Thank you so much for coming on.

[Paolo Arduino]

Thank you. Thank you.

[Tracy Alloway]

Joe. That was so interesting. Obviously, there have always been a lot of questions swirling around Tether, so it was good to, you know, put some of them to the CEO.

[Joe Weisenthal]

Can I say that when Tether reached out to us about the like, oh, do you want to have the CEO on the podcast? I thought there was like at least a 50% chance that we were going to get like deep faked, that it was like going to be some North Korean hackers and that we're going to like have to click into a link of that was like something that looked like the word zoom, but that actually wasn't. And then enter a credential and then there would be a video.

[Tracy Alloway]

Send your private keys.

[Joe Weisenthal]

So, like, I really, you know, send your private keys. Here's an AI representation of Palo Arduino. I'm still not sure. It could be that when this comes out, maybe we're gonna hear, no, I don't think so.

[Paolo Arduino]

But maybe when it comes out, at.

[Tracy Alloway]

A minimum, we can confirm the existence of Paolo, right?

[Joe Weisenthal]

We can confirm that we talked to someone who looks a lot like every picture of Paolo Arduino that we could confirm. No, I thought it was really interesting. You know, it's a big force. It seems like a pretty big reality, like, powerful entity within global finance.

[Tracy Alloway]

Yeah, this is the thing. And I guess going back to where we started this whole Discussion Again, like 15 years ago or whatever, I don't think anyone would have expected that. We're in a world where stablecoins are so large and we're in a world where, you know, we're really preparing for stablecoins to become even bigger in the form of that stablecoin bill, putting in potential guardrails, that sort of thing.

[Joe Weisenthal]

God, what a sick business model. Just talk about it's so sick. They're making so much money for like no effort. And you ask, like, what's so complicated about the business? It's clearly not that complicated. They just hold a bunch of money and then they have a token. They just gotta match it one to one and that's all. And then they collect the interest and they remit none of that to their holders. I do wonder, you know, I asked that about, like that margin, whether it's gonna compress. Paolo talked about, okay, in the US maybe for institutional, that margin is important. You gotta wonder, maybe someone will enter the non US markets with the ideas, like, not only can you hold dollar assets, but we'll give you some. We' that yields you. But in the meantime, that's a money printer printing money. Yeah, literally.

[Tracy Alloway]

All right, shall we leave it there?

[Joe Weisenthal]

Let's leave it there.

[Tracy Alloway]

This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[Joe Weisenthal]

And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Paolo Arduino. He's Pauloarduino. Follow our producers Carmen Rodriguez, Ermenarmon, Dashiell Bennett at dashbot and Cale Brooks at Kalebrooks. For more Odd Lots content, go to bloomberg.com oddlots where we have all of our episodes as well as a daily newsletter and you can chat about all of these topics 247 including crypto in our Discord, Discord, GG, Oddlauds and if.

[Tracy Alloway]

You enjoy Odd Lots, if you like it when we check in on stablecoins, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.

[Talkspace]

You know, when you're really stressed or not feeling so great about your life or about yourself, talking to someone who understands can really help. But who is that person? How do you find them? Where do you even start? Talk Space Talkspace makes it easy to get the support you need. With Talkspace, you can go online, answer a few questions about your preferences, and be matched with a therapist. And because you'll meet your therapist online, you don't have to take time off work or arrange childcare. You'll meet on your schedule wherever you feel most at ease. If you're depressed, stressed, struggling with a relationship, or if you want some counseling for you and your partner or just need a little extra one on one support, Talkspace is here for you. Plus Talkspace works with most major insurers and most Insured members have a zero dollar copay. No insurance, no problem. Now get $80 off of your first month with promo code SPACE80 when you go to talkspace.com Match with a licensed therapist today at talkspace.com Save $80 with code [e-mail].

[Thrivent]

Something unexpected happened after Jeremy Scott confessed to killing Michelle Scoffy in Bone Valley Season one.

[Paolo Arduino]

Every time I hear about my dad is oh, he's a killer. He's just straight evil.

[Thrivent]

I was becoming the bridge between Jeremy Scott and the son he'd never known.

[Paolo Arduino]

At the end of the day, I'm literally a son of a killer.

[Thrivent]

Listen to new episodes of bone Valley Season 2, starting April 9 on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.