Stablecoin Issuer Tether Moves Into Tokenising Stocks and Bonds

Tether Holdings Ltd., the world’s largest digital asset company, is getting into the tokenisation of stocks, bonds, funds and commodities.

The platform Hadron by Tether, launched Thursday, will allow users to convert assets into products ranging from stablecoins that are pegged to fiat to digital tokens backed by commodities or other forms of collateral. The British Virgin Islands-registered company is targeting businesses and governments as customers, Tether said in a statement.

Turning assets into tokens can allow them to be traded quicker and at a lower cost. The assets can be traded on blockchains by transferring them from one cryptocurrency wallet to another.

These potential advantages led Wall Street companies like BlackRock Inc., JPMorgan Chase & Co. and Franklin Templeton to offer tokensed money market and mutual funds over the past couple years.

Stablecoins, a form of crypto token pegged to another asset, use reserves to support their value. They are integral to the way crypto markets operate, acting as a less volatile alternative for traders looking to swap between digital assets and to store their wealth. Tether’s stablecoin USDT, which is pegged to the dollar and backed by Treasuries and other assets, currently has over $126.6 billion tokens in circulation. 

The tokenisation platform is the latest effort by Tether to expand beyond its core business. The firm announced last week that it completed the funding of its first crude oil transaction in the Middle East as part of a plan to become a lender in commodities trading. 

The closely-held company has been the center of controversy in the past. Tether has previously faced fines from the Commodity Futures Trading Commission and settled with the New York Authority General surrounding allegations that it lied about its reserves in the past and made misleading statements. 

© 2024 Bloomberg L.P.