To sum it up, this isn't a problem of Tether lacking funds; it's a matter of "pricing power." Tether has reportedly cut its fundraising target from $20 billion to $5 billion. Wall Street acknowledges Tether is a super money-printing machine, but refuses to acknowledge it as the next Nvidia.
Even though it holds one of the lifelines of global U.S. bond liquidity, in the eyes of seasoned investors, Tether is still a bank that "profits from interest rate spreads".
Is the $500 billion valuation real or fake?
According to the latest report from the Financial Times on the 4th, Tether's fundraising target has shrunk from the originally announced $15 billion to $20 billion to $5 billion. The market's previously rumored valuation of $500 billion now seems more like a tentative offer.
Tether's core business is essentially a "stablecoin issuer" plus a "high-tech money market fund," along with newly added gold and AI sectors. The profits from this type of business are heavily reliant on US Treasury yields, falling under the category of traditional finance, and the market typically assigns a price-to-earnings ratio of at most 10 to 15 times to such businesses. Reaching a valuation of $500 billion means Tether needs investors to view it as a rapidly growing AI company. This is why Wall Street institutional investors hesitated at the negotiating table.
CEO: We are a profitable AI company.
Tether CEO Paolo Ardoino's response to this matter was classic. Regarding the reduced funding, he denied it was a "downgrade" and redefined the current inflated valuations of AI. In an interview, Paolo stated:
AI companies generate the same amount of profit as us, only with a negative sign (loss).
This statement, while full of sarcasm towards Silicon Valley, also reveals Tether's anxiety. Paolo Ardoino is trying to tell the market not to think of them as just a bank that issues stablecoins; they have money on hand and are transforming into an AI computing power giant through investments in companies like Northern Data. He emphasized that they have ample internal cash flow, and even major shareholders are "reluctant to sell" their shares.
Declining financial profits and asset moat
Turning our attention to the numbers, according to Tether's 2025 data, Tether earned approximately $10 billion in net profit that year. This figure is astonishing, even surpassing many Wall Street investment banks. However, if we compare it to $13 billion in 2024, we can see that profits declined by about 25% year-on-year.
Why did profits shrink despite a record-high issuance of $186.5 billion? The reason lies in the squeeze from costs and interest rate spreads. To achieve compliance, such as launching USAT compliant with the GENIUS Act and establishing global fiat currency channels, Tether's hidden costs are increasing. This is why they are eager to prove they are more than just a stablecoin company.
However, anyone who has looked at their balance sheet must acknowledge the company's formidable strength. First, there's their status as a U.S. Treasury whale: holding $141 billion in U.S. Treasury bonds, they are a major creditor of the U.S. government. This is known as the Cantillon Effect—those closest to the printing press benefit the most.
Secondly, there's the hedging with highly liquid assets, holding $17.4 billion in gold and $8.4 billion in Bitcoin. This shows that Tether is using its native assets to hedge against fiat currency risks.
If they don't lack money, why do they need to raise funds?
If you don't need money and earn 10 billion a year, why would you sell shares? The answer is simple: to buy insurance for old money.
In the second year of the Trump administration, while the cryptocurrency regulatory environment appeared to be easing, the backlash from traditional banks was just beginning. What Tether needed wasn't the $5 billion in cash, but rather the shareholders behind it—the Wall Street giants who could wield influence in Washington. Tether's true purpose in raising funds was to bring traditional capital on board through equity ties.
Whether a valuation of 500 billion can be achieved is simply a matter of changing hands on the negotiating table.
