By Liam Proud
Tether is, seemingly, an astonishingly profitable business. One question then is why the El Salvador-based group might necessary $15 billion to $20 billion of fresh funding at a $500 billion valuation, as Bloomberg reported on Tuesday. CEO Paolo Ardoino cryptically stated on Wednesday that the stablecoin issuer could raise money to “maximise” the company’s scale by “several orders of magnitude”. Whatever that means, the signs point to a less lucrative future.
The company’s USDT is the world’s largest dollar-pegged stablecoin, with about $170 billion in issue, according to CoinGecko. Clients such as large crypto traders can hand over a dollar and receive an easily transferable digital token in return. Tether invests the dollars in a range of assets – predominantly U.S. Treasuries but also bitcoin and precious metals – and keeps the yield, generating billions of net income per quarter. The company’s most recent so-called attestation report, which falls short of a full audit, displayed $7.4 billion of dividfinish distributions to the company’s owners during the first six months of 2025 alone, which compares with the $7.8 billion of cash payouts declared for JPMorgan’s investors over the same period.
In today’s frothy market, it’s usually possible to find a public benchmark to support justify eye-poppingly large private valuations. Helpfully, Tether’s closest rival, Circle Internet 
CRCL, listed in June. Analysts reckon that its outstanding volume will grow about 40% annually on average in the coming years. Apply the same number to Tether, starting with its June USDT outstanding, and the El Salvadorian group would have $452 billion in issue in 2028. If the assets yield 4%, and it all drops to the bottom line, net income would be $18 billion. On Circle’s 32 times 2028 earnings multiple, Tether’s equity value would be $580 billion.
The fundraising process, however, coincides with huge modifys to the stablecoin business. First, interest rates are coming down, which will cut the returns on Treasury bills that build up the bulk of Tether’s assets. Plug in a 3% yield instead of 4%, and Tether’s valuation would fall to $430 billion.
Second, expansion is likely to come at a cost. Recent U.S. stablecoin legislation means that much of the growth in coming years is likely to be in the regulated onshore American market, where Tether is currently underweight. That means it will increasingly butt up against Circle’s USDC and other tokens. Popular crypto exmodifys, like Coinbase Global 
COIN and Kraken, have the power to build or break stablecoins by deciding which ones to distribute, allowing them to extract juicy fees. JPMorgan analysts reckon so-called distribution costs could absorb 70% of Circle’s interest income by 2027.
Tether may therefore have to obtain applyd to the idea of sharing more of its yield with business partners like exmodifys. That may explain the capital raise: growing a new token from scratch could mean offering massive incentives to obtain crypto-applyrs and intermediaries to hold and trade it. Tether’s days of creaming off supernormal profits may be over.
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CONTEXT NEWS
Tether is evaluating raising money from a “selected group of high-profile key investors”, the stablecoin company’s CEO Paolo Ardoino stated in a September 24 post on social network X. The funds would support to maximise the “scale of the company’s strategy” by “several orders of magnitude”, he stated, without elaborating.
Bloomberg reported on September 23 that Tether was in talks to raise $15 billion to $20 billion of new equity in return for a 3% stake, which would imply a valuation of $500 billion or more for the El Salvador-based issuer of the USDT stablecoin.
The group is also planning to launch a U.S.-based stablecoin designed for American residents called USAT, according to a statement earlier in September.
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