Tether Considers Tokenization to Manage Investor Exits in $20 Billion Raise

Tether, the company behind the USDT stablecoin, is exploring ways to manage investor liquidity as it prepares a fundraising of up to $20 billion at a valuation of $500 billion, a deal that would place it among the most valuable companies globally, private or public.

As part of the process, Tether has intervened to stop some existing shareholders from selling their stakes outside the formal fundraising. According to people familiar with the matter cited by Bloomberg, management was concerned that discounted share sales could weaken confidence in the deal and complicate negotiations with potential new investors.

To address longer-term liquidity concerns, Tether’s executives are considering options such as buying back shares or digitally representing its equity on a blockchain, a process known as tokenization. Tokenized shares could allow limited trading under controlled conditions, offering investors a way to exit without the company going public.

The company is not currently planning to allow existing investors to sell as part of the main funding round. While at least one shareholder had explored a large sale at a lower valuation before the fundraising became public, that plan was abandoned.

Another early investor, Blockchain Capital, also considered selling a portion of its stake but ultimately decided not to proceed. With no timeline set for an initial public offering, investors may have to wait years for a traditional exit.

Tether’s scale reflects its central role in the stablecoin market. USDT, which is designed to track the US dollar, has about $186 billion in circulation and is widely used in crypto trading and payments.

The company expects to generate around $15 billion in profit this year, largely from returns on the reserves backing the token, using the profits to fund investments outside crypto.

Sources:
Bloomberg
Crypto Valley Journal

Image source:
CNBC

J.V.