Tether (USDT-USD), a cryptocurrency pegged to the U.S. dollar, has quietly but rapidly become a powerhouse in the global financial ecosystem. It’s not just another stablecoin; it’s now an essential tool in both legitimate and shadowy markets. With nearly $190 billion in daily transactions, it rivals Visa in size and even surpassed BlackRock in profitability last year, despite having under 100 employees. As The Wall Street Journal reports, Tether has grown into “an important cog in the global financial system,” but it operates in a grey zone that has raised eyebrows worldwide.
How Tether Bypasses Sanctions and Fuels Illegal Activities
Tether’s success comes with a dark side. According to The Wall Street Journal, Tether has found a niche as a “sort of incognito dollar” in countries like Iran, Venezuela, and Russia—places cut off from the global financial system due to U.S. sanctions. For instance, Russian oligarchs and sanctioned companies use Tether to move money abroad discreetly. This digital dollar also facilitates payments for sanctioned goods and services. “We need a regulatory framework that doesn’t allow offshore dollar-backed stablecoin providers to play by a different set of rules,” said Deputy Treasury Secretary Wally Adeyemo, highlighting concerns that Tether’s operations undermine U.S. sanctions.
Tether Provides a Lifeline in Hyperinflationary Economies
On the flip side, Tether isn’t just for criminals and sanctions-busters; it’s a lifeline in economies hit by hyperinflation. In Venezuela, for instance, inflation once hit 2 million percent, wiping out savings in bolivars. Enter Tether, the “digital dollar for all Venezuelans,” as Guillermo Goncalvez, who runs the peer-to-peer trading platform El Dorado, put it. With over 150,000 users, El Dorado helps Venezuelans trade Tether directly, offering a way to protect their money without the crippling fees of traditional remittance services.
Russia Embraces Tether Amid Financial Isolation
In Russia, Tether’s popularity has soared post-sanctions. It’s not just small-time traders; major banks like Rosbank are now using Tether to help clients bypass restrictions. As The Wall Street Journal notes, Tether is the go-to currency for Russia’s elite. Ekaterina Zhdanova, a Russian fixer, facilitated massive Tether-for-ruble deals, even coordinating plane pickups for cash. The U.S. Treasury later sanctioned her for moving crypto on behalf of oligarchs.
Tether Invests in Global Financial Infrastructure
Looking ahead, Tether isn’t sitting idle. It’s investing in startups around the world, promoting Tether-based payment systems. In Tbilisi, Georgia, where Tether is widely used by Russian expatriates, the company has already invested $25 million. The aim? To cement Tether’s role as a major payment system, particularly in economies overlooked by traditional finance.
A Double-Edged Sword
Tether is walking a tightrope between innovation and illegality. It’s the cryptocurrency that everyone seems to need but no one seems to trust. Whether you see Tether as a financial savior or a rogue currency depends largely on where you stand. But one thing is clear: Tether is here to stay.
