MW Tether is betting big on the U.S. dollar. Why it faces challenges from Trump's tariffs.

By Chris Matthews

The stablecoin issuer is betting its $20 billion haul that the greenback will weather the tariff storm

Stablecoin issuer Tether made $13 billion last year - more than storied financial firms like Goldman Sachs, and potentially more per employee than any company in history.

It has, as yet, no official sanction from U.S. financial regulators, no footprint in Washington to speak of and fewer than 200 employees. But it's placing a massive and unwavering bet on the U.S. dollar DXY.

At a moment when Donald Trump's new tariffs are upending the globalized economy and America's rivals are accelerating plans to dedollarize, Tether is working to embed the dollar deeper into the global economy.

"We are the boots on the ground," Tether Chief Executive Paolo Ardoino told MarketWatch, "building the biggest distribution network, physical and digital, for the U.S. dollar ever in the history of humanity."

Tether's dollar-backed stablecoin, USDT (USDTUSD), is designed to maintain a one-to-one peg with the U.S. dollar. Unlike cryptocurrencies like bitcoin (BTCUSD), USDT is not meant to fluctuate in price. Instead, it functions as a digital stand-in for cash that has long been used by crypto traders move funds between exchanges, hedge against volatility and settle trades.

Increasingly, stablecoins are viewed as the first crypto use case that will see widespread real-economy adoption, as they are also an efficient means of sending money around the globe, especially in many countries with underdeveloped financial systems.

The mainstreaming of stablecoins hit a milestone in February, when payments giant Stripe acquired Bridge, a company that facilitates businesses accepting stablecoin payments, for $1.1 billion. Bridge's clients include crypto exchange Coinbase $(COIN)$ and Space X, which reportedly uses the service to accept stablecoin payments for its Starlink satellite service, popular in emerging markets.

Today, Tether is not just the original stablecoin - it's by far the most widely used. USDT accounts for more than 60% of the stablecoin market, with more than $140 billion in circulation.

That dominance is clearest not on Wall Street or in Silicon Valley, but in emerging markets where Tether is used for remittances and for those seeking stability amid inflation, sanctions or political upheaval. The company says more than 100 million wallets now hold USDT, making it one of the most widely distributed forms of dollar access on earth.

"If you stop 1,000 people [in emerging-market countries] and ask them, 'Would you prefer to hold your national currency or the U.S. dollar?', they will say the U.S. dollar," Ardoino said. "Not one of them will say, 'I prefer my lira,' or 'I prefer my peso.' That's the power of the dollar."

But this expanding dollar distribution network is growing at a moment of deep uncertainty about the greenback's future, as President Trump is imposing a slew of heavy-handed tariffs aimed at breaking the U.S.'s dependence on foreign goods, and foreign economies' dependence on U.S. financial assets.

Indeed, despite economic theory that predicts otherwise, the dollar has slid against rival currencies amid Trump's trade war, as investors lower their expectations for U.S. growth.

See also: Trump's tariffs are having a surprising impact on the U.S. dollar. Here's how investors can benefit.

Deutsche Bank economists even warned Thursday that extreme trade tensions and the subsequent market meltdown has them "increasingly concerned that the dollar is at risk of a broader confidence crisis."

Meanwhile, U.S. rivals are also seeking to rid themselves of the dollar in order to avoid an increasingly ambitious U.S. sanctions regime. China, Russia and other countries in the so-called BRICS coalition are exploring the potential for new vehicles, like a gold-backed stablecoin, to avoid using the U.S. currency as a means of payment.

"The combination of forces - aggressive dollar weaponization, technological innovation and China's rise - creates conditions where meaningful dedollarization has become not just possible, but increasingly probable," Diana Choyleva of Endono Economics wrote in a recent analysis of the trend.

Ardoino said that this is an outcome he's fighting against, as he believes a hegemonic dollar has been an unalloyed good for the global economy, as well as his company.

While the Tether CEO is watching closely as Congress debates a long-awaited regulatory framework for stablecoins - and is prepared to issue a U.S.-compliant version of USDT if it becomes law - his deeper focus in on Washington's broader commitment to dollar supremacy.

What worries him more than new rules is the possibility that U.S. policymakers could step back from defending the dollar's global role at a moment when geopolitical challengers are gaining ground.

"I believe the biggest threat across the board to the U.S. dollar generally is a digital currency backed by gold," Ardiono said. He noted that the presence of Chinese infrastructure projects across Africa and other emerging markets where Tether is gaining traction is evidence of that country's ambitions to supplant U.S. power.

"That's why its important for this administration to support dollar stablecoins," he said. "It's already hard out there, and we need some backup from the United States."

Read more: The SEC has disarmed. Now it's time for crypto to 'deliver on its promises.'

-Chris Matthews

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 05, 2025 09:00 ET (13:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.