Tether's CEO Speaks on His Insanely Profitable Business

Anything crypto-related is frequently greeted with a high degree of skepticism. Within that, one of the most controversial companies for a long time has been Tether, the company behind the popular stablecoin USDT. But despite people predicting otherwise, the company has boomed. It's insanely profitable. It's one of the largest holders of US Treasuries in the world. And because of the change in the US administration, it's gathering fans in Washington, DC. In this episode, we speak with Tether CEO Paolo Ardoino about what it's like to run this business, how they work with law enforcement, future growth opportunities, and why, after all these years, it's still never had a formal audit. Read more:What Are Stablecoins and Why Are Regulators Wary? Tether To Buy a 30% Stake in Italian Media Company Be Water Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 0:58Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:41Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 1:57Tracy Alloway?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

• 2:02Joe Weisenthal?

  And I'm Joe Weisenthal.

• 2:03Tracy Alloway?

  Joe, it is April here in New York.

• 2:06Joe Weisenthal?

  That's right.

• 2:07Tracy Alloway?

  It is my 10 year anniversary at Bloomberg.

• 2:10Joe Weisenthal?

  This month?

• 2:11Tracy Alloway?

  This month.

• 2:12Joe Weisenthal?

  Oh, that's awesome. You're gonna get a pilot. That's great.

• 2:15Tracy Alloway?

  It's put me in a very thoughtful mood. A whole decade since Joe tricked slash enticed me into coming here. So, thank you, Joe.

• 2:22Joe Weisenthal?

  Are you happy about, are you happy about how it worked out?

• 2:25Tracy Alloway?

  I can't, I can't complain.

• 2:26Joe Weisenthal?

  Okay, good, good.

• 2:27Tracy Alloway?

  I will say it was a bit rocky in the beginning, but we worked it out.

• 2:30Joe Weisenthal?

  All right, where's this going?

• 2:32Tracy Alloway?

  Okay, in that 10 years, a lot of things that I would never have expected to happen have happened.

• 2:40Joe Weisenthal?

  Yes, go on.

• 2:42Tracy Alloway?

  One of them is the phenomenal growth of the crypto industry. So, I first started writing about Bitcoin in 2011. And I will openly admit that I think by like 2013, I had written, I think, like three or four obituaries for Bitcoin as well. So, you know, I got that wrong, clearly. But one of the other things I got wrong on crypto is the phenomenal growth of stable coins.

• 3:07Joe Weisenthal?

  Yeah.

• 3:07Tracy Alloway?

  So, you look at something like Tether, the world's biggest stable coin. We talk about it in the same sentence nowadays as Eurodollars, for instance. And the company itself is this huge player in financial markets. Like, it owns more T-bills nowadays than some countries, which is all pretty amazing.

• 3:27Joe Weisenthal?

  Well, let's be honest for a second here. You know, you might have thought that Tether wouldn't even exist at this point. Because it had a reputation for years and years. Like, they're a bunch of scammers, they can't pass an audit, the money isn't there, etc. It's gonna go away. Why would you ever hold a tether? We asked Sam Bankman-Fried that years ago. Why would you hold a tether when there are other companies that have done audits, etc.? There are many people, not only setting aside the size, setting aside all of the assets that it owns, that backs, you know, the world's most popular stable coin. There are many people who just thought, oh, this company can't continue.

• 3:58Tracy Alloway?

  Oh, totally. The other thing I thought was that US officials were never gonna grow companies. comfortable with the idea of

• 4:03Joe Weisenthal?

  Oh, yeah.

• 4:04Tracy Alloway?

  a loosely regulated foreign company creating synthetic dollars. But, you know, the Trump administration seems to have some other ideas. So we should talk about all of that.

• 4:13Joe Weisenthal?

  Let's do it. We have the perfect guest.

• 4:15Tracy Alloway?

  We do have the perfect guest. We're going to be speaking with Tether CEO Paolo Ardoino. He is, of course, the head of the world's largest stablecoin. So Paolo, thank you so much for coming on the show.

• 4:26Speaker 04

  Thank you for having me. I'm very excited to be here today.

• 4:29Tracy Alloway?

  So just to begin, has Tether's growth surprised you? Did you ever expect to ramp up to this degree?

• 4:37Speaker 04

  So I joined Tether very early, was early 2015, just after a couple of months that was actually created. And we were discussing internally, myself and Giancarlo. And we were asking ourselves, the biggest number we could think about in terms of growth and projection of growth of the our stablecoin was between $100 million and $1 billion. And now today is $144 billion in total issued tokens. So we are incredibly excited. We are impressed ourselves. But I must say that it's all happened organically over a decade.

• 5:16Joe Weisenthal?

  The stablecoin business is so sick, it seems to me, right? Because you hold all of these assets that back one to one these tokens that move on blockchains. And you collect all this interest and the holders of the coins don't collect any interest. According to a release on Tether's own website, you made $13 billion in 2024. Various estimates have your total employees somewhere a little bit below 200. So that makes per profit employee somewhere close to 90 million per employee. Like, that's basically correct math, that this is like one of the most extraordinary, maybe the most profitable business in the history of business.

• 5:56Speaker 04

  Yeah, I think it's definitely extraordinary. I define Tether once in a century company because of the capital that we have given our profits. In the last two years and a half, we made around 20 billion in profits. And we almost distributed, well, we distributed a very, very tiny part to their shareholders. I mean, I name another company, another fund or whatever, that distributed less than, I don't know, 10% or probably even less than 5% of profits to their own shareholders. So that is something that is unprecedented. And it's, you know, it's setting Tether to be able to reinvest 95% of its profits in keeping growing its distribution network for the US dollar.

• 6:40Speaker 04

  And also investing in other pretty cool things from artificial intelligence, Bitcoin mining, and the tens of other opportunities around the world.

• 6:47Tracy Alloway?

  So you mentioned distribution of the US dollar. And there is some tension there, right? I mentioned earlier that I never thought regulators were going to be okay with someone basically creating a synthetic dollar that can trade around the world. But times have changed and some things are shifting on the regulatory front. But are you a competitor to the US dollar? Plenty of people would say you are. Or are you something that perhaps complements it?

• 7:15Speaker 04

  I don't think we are a competitor to the US dollar. USDT is a digital dollar that is backed for most of it by US treasuries. We are bringing the US dollar out there in the emerging markets of developing countries. We have, as of today, more than 400 million users. Actually, it would be 550 million users. I'd like to be a bit more conservative to avoid double counting users. So I would say more than 400 million users. We grow at the pace of 30 million new users per quarter. That is, again, we are not Facebook, we are just a digital dollar. So it's really unprecedented and staggering.

• 7:55Speaker 04

  The reason why we are interesting for the United States and the regulators are now appreciating who we are and what we are doing is the fact that we have been building the biggest distribution network for US dollar in a physical form and a digital form. We have millions of touchpoints around the world in the emerging markets. We never approached our distribution going through institutions in the emerging markets, but we built. Physical infrastructure from kiosks in villages in Africa to bodegas in Central South America. And again, we are just distributing a digital dollar. And, look, the reality is that the US dollar hegemony is very, very important for United States.

• 8:39Speaker 04

  And when we are in Africa, when we are in Central South America, there is not much US presence. There is, actually, there is present apart maybe McDonald's, but in some countries in Central South America, the actual presence of infrastructure in United States is not there. So what Tata is doing in those countries is purely building that infrastructure and trying to, in a way, combat, actually, more than in a way, it's, we are, I think, the last stronghold before the very strong push towards de-dollarization made by the BRICS countries. So we see, for example, that in Central South America or in Africa, there are hospitals, schools, libraries, and airports that are built by China.

• 9:24Speaker 04

  And again, there is an interest from the BRICS countries to launch a digital currency backed by gold. Plus, they are building an infrastructure in these countries. So all the employees, all the people that will rotate and gravitate around these new infrastructures built by BRICS countries will start using something that is not the US dollar. So I think it's becoming very, very clear that actually Tata is the best ally for the United States, is the company. When we are also in these countries, we are not seeing NGOs, we are not seeing charities, we are the company that also solved or is solving financial inclusion in the strongest way possible.

• 10:00Tracy Alloway?

  Joe, I gotta say, it's a little bit depressing that, you know, a company that was founded by an Italian in Europe, incorporated in the BVI, although I think you're moving to El Salvador.

• 10:11Speaker 04

  Correct.

• 10:12Tracy Alloway?

  Is the ambassador for US presidents.

• 10:14Joe Weisenthal?

  Is the bulwark, the bulwark against the end of the dollar. Well, history can be funny in that respect. Why haven't you ever been audited?

• 10:23Speaker 04

  So in the past, with the past administration, last four years, I must say that was not easy to deal with the past, again, administration. So I remember Senator Warren sending letters around to different organizations. There was a case of the Operation Chalk Point 2.0 that was very aggressive towards the banking industry that was supporting cryptocurrency companies. On the other side, that letter also scared away and was targeted towards the big four auditing firms and other auditors that were then disincentivized to go against the will, the strong will of an administration that was really against crypto in general.

• 11:09Joe Weisenthal?

  Just real quickly, so obviously you hold your money or a lot of your, the assets that you hold are with Cantor Fitzgerald, its former CEO Howard Luck, now the Commerce Secretary, friendly with the administration. There has been this changing of the guard. Has the changing of the guard at the administration level had any bearing on the reason that you're here in New York City and comfortable visiting the US?

• 11:33Speaker 04

  So I have been always comfortable to visit the US, but you want usually to go where what you are doing for 97% of your time, or well, 80% of your time, given I sleep only a few hours, is being accepted and is not considered a very bad thing by the administration, right? So you want to deal with the, with people that support what you're doing, and at least they have the will to understand what you're doing. So actually, the change in administration is what is making possible for us, for Tether and other many cryptocurrency-related companies to start to deal with the big four auditing firms. We are in discussions, we have multiple discussions on the topic of audit. We hired a new CFO a couple of months ago. It's great.

• 12:18Speaker 04

  Simon went through multiple contentious full audit across his entire career. I don't think that our audit should be contentious, but given, again, the complexity and the new field that is crypto world is possibly one correct term and adjective that I could use here. And look, we are very positive that the full audit is our top priority, and I'm pretty confident that we're going to make it.

• 12:44Tracy Alloway?

  So just to be clear, on the regulatory point, things are changing, as you just mentioned, and previously there was regulatory pressure on the big accounting firms to not work with you. That seems to be going away. That's going to allow you to do an audit. Do you have a timeframe for when you might do that?

• 13:03Speaker 04

  So in the past, we committed a few times and we provided timelines that were not realistic because of the fact that, as I said, the administration really doubled down on trying to kill an entire industry. That was very, very sad to see. So again, we are moving as fast as we can. There is, of course, some change that is still needed among the big four auditing firms. So while they are getting more comfortable, look, the administration changed only two months ago. So give them a little bit of time to get comfortable and we are providing all the, we are again already in discussions. So it's crazy, the administration changed two months ago and we are already in discussions with big four auditing firms.

• 13:48Speaker 04

  So that is the best thing that I can say. And again, the fact that we hired a new CFO and that has, you know, the highest experience in the sector to get through audits is something that should reinvigorate our position.

• 14:15Speaker 00

  What's next for virtual assets? I'm Jacob Grease, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 14:31Speaker 05

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 14:40Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Rhys Merrick of Ripple says.

• 14:47Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 15:07Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 15:17Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 16:00Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at chatgpt.com.

• 16:40Tracy Alloway?

  What's the complexity of doing an audit for a business like Tether? I've always wanted to ask this question. So you know, you need a professional accounting firm to do this because you want to give people who use Tether, investors, some sense of safety and stability and truth in what you're portraying. But at the same time, it seems like, you know, you should have a pretty good idea.

• 17:02Joe Weisenthal?

  It seems simple. You just count up the treasuries and count up the tokens. And if they match, what are we missing here?

• 17:07Speaker 04

  I agree with that. In fact, the problem I don't think is about the complexity of going through our reserves, because as we said, we keep the majority, the vast, vast majority of our treasuries in Counter-Freed Gerald, that is a very highly regulated financial institution here in the US. I think that the confidence in the industry, in the digital assets industry is growing among the big four auditing firms. And look, on the other side, you can go on blockchains and blockchains are very, very transparent. So you can count the liabilities through the transparency of the blockchain. And on the other side, you can just independently contact our custodians. I think that what we expect from the full audit is also confirmation of our good practices

• 17:49Speaker 04

  that we have within the company in terms of controls and safety and proper management, for example, the private keys and all that stuff. So that's a process that we want to make sure that we go in the deepest details possible with our auditors, because there is nothing that excites me more than prove that we were always right. We had our luck in 2024, going out there saying, Tether has the money. We are releasing a quarterly attestation from a very reputable auditing firm called BDO, they are international. So there are many, many different independent validators of our reserves, but you know, we just want to get the full audit done.

• 18:28Joe Weisenthal?

  Circle, one of your competitors, holds its money in a money market mutual fund from BlackRock called the Circle Reserve Fund. What is the advantage of going out and acquiring Qsips of various flavors directly, such that you're a direct holder of treasuries, rather than outsourcing it like that? Here's an institution, BlackRock, they set up a money market mutual fund that you could just buy into and not have to think about that part. Why the preference towards the direct holdings of the bills and bonds?

• 18:58Speaker 04

  So that's a good question. So we prefer to have a direct control over the process, and we do that through Counterfeit Gerald. Also, having that direct control allows us to have access to the infinitely liquid repo market. So we think that is in case of huge pressure from the markets and huge redemption pressure, our facility is much better than anything else attempted by our competitors. Look, think about in 2023, our major competitors had, and a big issue with Silicon Valley Bank, they kept uninsured cash deposits there. In 2022, Tether was attacked by funds that were clearly trying

• 19:37Speaker 04

  to cause a bank run on USDT. They tried, they amassed billions and billions and billions of USDT just to try to sell them under par on the secondary markets, on the different cryptocurrency exchanges. Again, Tether never refused a redemption, Tether never failed to redeem at $1 each token. But at that time, when that happened, these short sellers were trying to just cause a bank run. And so what happened is that Tether was able to redeem $7 billion in 48 hours and $20 billion in 25 days. So $7 billion were 10%

• 20:15Speaker 04

  of our reserves and $20 billion were around 20 something percent of our reserves. So, I mean, if you look at Washington Moody's and many other banks that failed from 2008 and after, there was no bank that was able to support a 10% bank run, and we did it with flying colors. We could have gone to till the end. That's what means to have a proper repo market and very deep liquid market for treasuries. We keep all treasuries that are basically three months in duration, 90 days. So I think we built the best facility for handling any sort of redemption and provide the proper amount of trust that our users need around the world.

• 20:58Tracy Alloway?

  So you made it through 2022. It must have still been fairly traumatizing or scary at the time to have that much withdrawal pressure on the business. Have you changed any of your redemption policies since then, or perhaps instituted, I don't know, new risk management around the peg point?

• 21:20Speaker 04

  So the concept of peg is interesting, right? People refer to the peg as, you know, if USDT or another stablecoin trades, you know, two, three basis points or 10 basis points below $1 on secondary markets, that is not the peg. The peg is our ability, the official peg of USDT is our ability to redeem every token that can be sent to our primary market, that is our platform, to $1. So we always redeem every single token at $1. So if someone on the secondary market is trying to short it and sell it 1%, 2% under par, that is a completely different thing. It does not mean that there is an actual issue.

• 22:04Speaker 04

  In fact, we demonstrated that we were able, even when we were attacked in a very heavy way, that would have destroyed every single company, every single financial institution in this world, we survived and very well. So actually, we had still PTSD, I must say, after that event, but I think that really reinforced our commitment to transparency. It's funny, because first, we were accused to not be transparent enough, and then when we are now very transparent and we are also saying how much money we are making, people get upset because we are making too much money. So it's quite interesting how it can go both ways. But look, now I think that there is no doubt that Tether has, in this moment,

• 22:42Speaker 04

  $144 billion in issued outstanding tokens and around $164 billion in excess equity across the group. So it's something, so we have $20 billion in proprietary capital within the company, among which seven billion are specifically to the last attestation, where specifically are specifically attributed to the excess reserves of the stablecoin. But again, the group has $20 billion in additional equity. So it's very rare that you see a company like this. And so, yes, we want, also the fact that we basically took out a very small amount of dividends proved the fact that for us, the safety of our ecosystem, the safety of our company is paramount.

• 23:26Speaker 04

  And if you look at our other competitors, they keep, you know, some peanuts. On top of dairy serves.

• 23:31Joe Weisenthal?

  You mentioned people complain about, oh, you're making so much money. And, you know, look, people are always going to whine about other people doing well. I get that, but I can think of one group that might genuinely have an eye on the profits. And that is institutional traders of crypto. And the question I have is you have this amazing business model where you collect all this yield on your treasuries and none of it remits. And how long can that last? Because I would imagine that if I were some hedge fund or if I were some high frequency trading shop, et cetera, I would not want to be holding this token. If I were holding a dollar, you know, even for a minute, I would put it in some sort of money market mutual fund, collect a day's worth of yield, whatever.

• 24:13Joe Weisenthal?

  You're not going to leave that in a non-interest bearing asset even for 10 seconds. Do you believe that the business model, the margin between holdings, what you pay out, can sustain itself with competition or will it inevitably compress?

• 24:26Speaker 04

  So you make a very good point, but I think that the issue there is that you would be right if stable coins in general would be a product made for the United States. Stable coins are not a product made for United States. Sure, stable coins can work in the United States. Stable coin can be used as a faster settlement system across the interbanking settlement system. But the reality is that Tether never focused on institutions. You know, institutions would betray you for one basis point. They would, would go, you know, they would do, they want, as you said, to use money market funds to maximize their returns. That is fair, that is normal. But so Tether built the biggest distribution network for US dollar in the emerging markets

• 25:10Speaker 04

  and developing countries where if you think about Turkey, if you think about Argentina, if you think about other, other countries, the national currency of these, these places had been devaluing very, very fast against the US dollar. So in Argentina, I think that pays Argentina last 10, 12 years, they evaluated 98% against the US dollar and the Turkish lira devaluated 80% against the US dollar in the last few years. So. Last year in 2020.

• 25:38Joe Weisenthal?

  So you're saying that 4% doesn't matter to them?

• 25:41Speaker 04

  Yes, because the intraday volatility of their national currency is higher than 4%. So why does it matter to them? And that's, they will stay with you, they will be loyal with you as long as you can prove them that you have the solid product they can trust for their family savings. And by the way, 40% of all the USDT holders are using USDT for savings. So that because we have people that live in Nigeria and emerging markets that need that as a lifeline against the devaluation of their national currency and inflation in their countries.

• 26:10Tracy Alloway?

  I take the point that Tether is not necessarily aimed at the US. But at the same time, there are rumors, there are always rumors swirling around about big global companies like an Amazon, maybe a Walmart, rolling out some sort of payment system or maybe a stablecoin competitor. And I think one interesting thing that's been happening lately is we've seen some retailers actually joining forces with crypto to try to lobby for the stablecoin bill, which is interesting. They're trying to reduce their swipe fees, I guess. Do you worry about that kind of competition coming in and potentially taking some market share from your business model?

• 26:54Speaker 04

  Again, the countries where we operate and where we are more successful is, you know, the US top cos are not necessarily that present, right? As I said, Tether invested half of its portfolio and half of its own equity. So outside the reserves of the stablecoin, we invested in building our distribution network. So we are building millions of touchpoints in across the world. You know, one, one interesting example is, you know, we, we came across the concept, well, we, there is a clear statistic that 600 million people in Africa don't have electricity at home, but they have smartphones, they have small televisions and a few other things. So what we are doing now is we are investing in a company.

• 27:36Speaker 04

  That is building kiosks in villages in Africa with solar panels on top and they sell or they rent batteries for three USDT per month. So with three USDT per month, you can swap a battery four times per month, so once per week. Now, the average salary of a person in Africa is around eighty dollars. And so this is like three USDT are, you know, a good compromise to have electricity at home with these very good batteries. So this is an example of how we and and we have already three hundred kiosks. We are planning to ramp up to ten thousand kiosks by the end of two thousand twenty six and one hundred thousand kiosks by the end of two thousand thirty. So the idea is that by two thousand thirty,

• 28:17Speaker 04

  we can serve around sixty million people in Africa that will be running on USDT as their main currency. So we are actually converting people to get on the US dollar. That's why I say that we are the best friends for and best ally for the US dollar gemonie. And just to finish, we have with that company on not only we are changing the and we're pushing the adoption of the US dollar. It's the it's a great example of a change that you will see from space because if you see Africa is very dark during the night because they don't have electricity. But if you power up sixty million people, that will change and that is a significant change.

• 29:11Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees. With the company looking for People with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 29:54Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 30:34Joe Weisenthal?

  There is an effort right now to regulate stable coins in the law, et cetera. If this passes, there's something called the stablecoin legislation, the Genius Act, I think it's called. And who can issue a stablecoin? A federal qualified non-bank payment stablecoin, something by the OCC.

• 30:50Tracy Alloway?

  The Genius Act for stablecoins, for stable geniuses, right?

• 30:55Joe Weisenthal?

  Yeah, right. The subsidiary of an insured depository institution, a state-qualified payment stablecoin. If something like this were to pass, you're talking about, you know, your priority has really never been the United States. You're talking about Africa, you're talking about Turkey, you're talking about Argentina, places that have seen significant devaluation. Would you register in the United States as a stablecoin under this law? Or would you choose to just like, you know what? The US isn't where our activity is.

• 31:20Speaker 04

  Right, so let me elaborate on the answer is, has multiple point of views. So first of all, we really appreciate, keep in mind that being the company that created the stablecoin industry in 2014 is a big honor that now lawmakers in the most powerful country in the world are looking at our technology and want to regulate it. So we are very, very excited for that. Second, the law and the Genius Act is a very well-done piece of law, and it allows few things. First of all, Tether could consider to create a domestic US-based stablecoin. The difference Is that a US domestic stablecoin would go towards would be used more for institutions.

• 32:02Speaker 04

  So the product market fit is completely different than a stablecoin that is used in kiosks in Africa.

• 32:08Joe Weisenthal?

  So this would be actually like a coin that might have a different ticker. It wouldn't be USDT.

• 32:12Speaker 04

  Yes, we are discussing about that opportunity, that possibility. I mean, look, we need to wait for the final language and to see which bill will pass. But definitely, we are open to that. Tether is, we discussed before about law enforcement regulations and all that. Tether, not many know this, but Tether is the only stablecoin, also including the US-based stablecoins that onboard the FBI, United States Secret Services. We work daily with the Department of Justice and the other organizations within the US. We've worked on more than 400 operations with US law enforcement. Across the globe, we work with 230 law enforcement agencies across 50 different countries.

• 32:51Speaker 04

  So when in the proposed Genius Act, there is the requirement of stablecoins, even for unstablecoins, because USDT would remain potentially an international stablecoin. We would be very happy to continue our collaboration and see in the written requirement of a collaboration with US law enforcement that we think is sensible. And everyone now, at least on X, knows this. We are the fastest responder to law enforcement requests compared to our competition. We don't wait for court orders that allows criminals to get away with it and move funds very quickly. We immediately act upon contacting, being contacted by law enforcement.

• 33:31Speaker 04

  But on top of that, among our people, we have probably the most impressive investigation team in the entire industry, also across, again, also across traditional finance. In fact, just a couple of weeks ago, there was the freezing of guarant tax. That was a cryptocurrency exchange sanction, a Russian one. And we worked for months with the Department of Justice to find the right way to do it, the right processes. Like, it's a very good collaboration. We received, I think, a couple of weeks ago, a thank you, a public thank you note for our proactivity in our collaboration with the Department of Justice. So this is how we are comfortable. So we believe that no matter if you are an international stablecoin or you're a domestic stablecoin,

• 34:12Speaker 04

  you need to work within the US parameters of sanctions and law enforcement. So.

• 34:19Speaker 04

  We believe that it's important for unstable coins to work with US law enforcement. But at the same time, the US domestic stable coins and foreign stable coins have a different value proposition. One is for people that are left behind by the banking system because there are 3 billion people that are unbanked, that they cannot afford to pay 150 dollars per year in banking fees. And those, I mean, I'm pretty sure that if you ask JP Morgan how many customers that they would want from our user base, they would say probably four, not 400 million, just because our customers are all singularly are too poor of being of their interest. But that's something very unique to Tether. In the US, you would need different use cases for stable coins because you have Zelle,

• 35:02Speaker 04

  PayPal, CashUp, and 600 gazillion ways to pay each other.

• 35:06Tracy Alloway?

  How big is your investigations team?

• 35:08Speaker 04

  So we have a specific internal investigations team that is between 20 and 30 people, plus a very big compliance team. And then on top of that, we have been contracting and working with the leaders in the space when it comes to blockchain analytics. So we borrow also external investigations team and ecosystem monitoring tools. We work with Chainalysis, TRM Labs. We recently announced a huge freeze working with TRM Labs related to the Babi attack and so on. So again, I think that there is no doubt that Tether has the highest standard when it comes to compliance and investigation within the cryptocurrency industry and the digital assistant industry, but also above and beyond.

• 35:48Tracy Alloway?

  So on this topic of cooperating with law enforcement, this is something I always wondered about crypto in general, but part of the selling point is anonymous transactions, right? And it's not even necessarily that you need an anonymous transaction in order to do something nefarious, like buy drugs or whatever. You might just want one for something like, I don't know, a husband buying his wife a birthday present and he doesn't want her to see it, or whatever. Anonymity is part of the selling point here for some of your customers. And yet, at the same time, we always hear that the transactions are traceable. You're cooperating with law enforcement. How do you sort of square that tension?

• 36:33Speaker 04

  So here's the thing, right? So sure, blockchains are transparent and they are not necessarily anonymous. They're pseudonymous. So with proper ecosystem monitoring tools, and we spent 10 years to perfect this. We can trace transactions. We can prove that criminals are found and punished. Let me give you an example. I think less than one year ago, our internal investigation team started to follow certain transactions. And they got some alerts from our triggers and configurations of our monitoring systems. And we found out that there was a potential pig butchering network. Oh, heard about this. Yeah, that was converting or using USDT.

• 37:18Speaker 04

  And that was on all the newspapers then eventually. But it ended up that Tether was the company that initially found out that there was this pig butchering scheme. And then conducted law enforcement. And we, all together with law enforcement, we conducted the investigation and we decided to freeze these assets. These assets amounted to $220 million. Now, on the newspapers, there was the headline, oh, USDT is being used by the pig butchers. But actually, not many understand the actual process. So pig butchering or romance scam happens when you might have a girl contacting a guy online, asking for some money to pay the rent and all, whatever.

• 38:02Speaker 04

  It's crazy that this amounted to $200 million, but it is what it is. But this girl that contacts the guy, what will not ask for USDT. Will ask for a payment through a payment processor. They will usually send a link. So there is. A guy that will swipe its card or input the card numbers on a website to do a payment to what he thinks is a nice girl. And then that payment goes through another payment processor, then goes to a cryptocurrency exchange, and that gets converted to USDT and moved on-chain. So three different opportunities fail in the traditional financial system when the credit card is being swiped and then the payment processor fails to recognize the issue and all that.

• 38:47Speaker 04

  So three times people and institutions fail to freeze that transaction and recover the funds. And then when it gets to USDT, we find it out and we freeze it and we can return the money to the legitimate owners. So that is the headline that should have been there because it's the right one, it's the correct one.

• 39:04Joe Weisenthal?

  That all makes sense to me. However, you know, the definition of what's criminal can be a spectrum, it can change by culture, it can change by time. So for example, in the US, it's illegal to deal drugs, but in another country, it may be illegal to distribute bibles or distribute condoms to an NGO or anything like that. There are also certain circumstances in which capital flight could be considered a crime. And when you talk about some of these countries with intense devaluation of their currencies, I could imagine a foreign minister in one of these EM countries saying, Tether is contributing to capital flight because our own citizens are making it, it's making it very easy for

• 39:48Joe Weisenthal?

  them to move their dollar assets, to acquire dollar assets in a way that we would never allow through our traditional regulated banking system. You talk about working with law enforcement. What if a law enforcement agency within one of these countries says, no, like, we do not want our population swapping our currency to be able to hold dollar assets?

• 40:09Speaker 04

  Very good point. So first of all, it's a matter of education, right? I met with a finance minister last year and I thought, walking in that meeting, I thought, well, he will be very annoyed for what we are doing. I will not name the country, but, but I thought that. And then I went there and actually, and that was something that I was going to explain to him anyway, but actually what we agreed on is that, sure, many people in those countries are using USDT to fly and fight inflation.

• 40:44Speaker 04

  And the devaluation of their national currencies. But on the other side, there are billions of dollars that are flowing in the form of USDT for remittances. So actually, USDT is counterbalancing those outflows, if you will, with the new inflows and new faster and cheaper inflows when it comes to remittances. So the average percentage of a GDP of an emerging market when it comes to remittances is 20%. For Philippines is $33 billion per year. And if you look at many other emerging markets, 20% is probably the low bar. There are countries that have 40, 50, 60, 80% of the GDP is remittances. So actually, we make remittances cheaper because if you look at, you know, the traditional

• 41:28Speaker 04

  remittances companies, they charge from 6% to 28% to move money internationally. So that is something that really well resonates with with the other country prime ministers, with institutions in these countries and so on. So in our point of view, we need to work primarily with US law enforcement and with European law enforcement. And we tend to not work with the tyrannical countries' law enforcement.

• 41:54Tracy Alloway?

  Okay. So we started this conversation talking about how big you've grown. And, you know, I mentioned you are an actual presence in the treasury market nowadays, in the repo market. As your holdings get larger, would you ever be tempted to maybe, I don't know if invest is the right word, but invest, trade a little bit more, maybe extend into slightly riskier assets, Bitcoin, I don't know. Do you diversify?

• 42:27Speaker 04

  So our reserves are in the majority, quite the higher majority of US treasuries short term. We have a bit of gold and we have a bit of Bitcoin. The reason for for that is that there is, in the emerging markets, developing countries, those other two things are very well respected and of much interest. At the same time, that's why also we keep very good amount of billions within the excess reserves to also prove to everyone that we are not here to speculate. We have the entire risk management very solid. Even if Bitcoin was going to zero, the company would still have several billion dollars in excess equity. So that's that's the message we want to give. I mean, it is important to.

• 43:10Speaker 04

  Perfect, a product that is very interesting for the audience, but at the same time prove that you are solid, that you're strong. And again, we are very happy to see regulations moving towards the reinforcement of what could be held in reserves by stablecoins.

• 43:25Tracy Alloway?

  So, summing it all up, again, the company has grown quite a lot, an actual presence in traditional financial markets nowadays. What's the biggest risk to your business nowadays? What, this is such a cliche, but what keeps you up at night? What do you worry about?

• 43:43Speaker 04

  Yes, could be, I mean, I'm sure that this will sound like an obvious and well crafted, well, I'm sorry, well, maybe not well crafted, but nevertheless, I think that I want to keep going, doing what I have been doing and what my team has been doing for the last 10 years. The biggest risk to me is that, you know, for, you know, one reason or the other, the, for example, the US or other countries don't understand the opportunity, the potential of the stablecoin industry. When it comes to Tether, I think that really in the last month, we have been taking so many meetings within the Hill and everyone has been incredibly receptive.

• 44:24Speaker 04

  So now there is proper education, understanding what we are doing. But what keeps me up at night is simply the fact that we have the biggest opportunity in the history of humanity to actually include billions of people in the financial world, and I don't want to fail.

• 44:40Joe Weisenthal?

  Very, very high minded. I was gonna, real quick question, are you talking about other Wall Street banks diversifying away from Cantor Fitzgerald, or is that going to be the only bank where you hold your treasury assets?

• 44:53Speaker 04

  So, treasuries are, and the beauty and the difference between holding treasuries and holding uninsured cash deposits as our competitors is that if anything happens, you can take your securities and move them anywhere else, right? So it's a very easy and clean process and, but I must say that Cantor Fitzgerald is the best company that believed in this industry already two, three years ago, when no one else understood this industry two, three years ago. So we are very respectful, our relationship.

• 45:25Tracy Alloway?

  Plus, you have a friend in the White House, right?

• 45:27Speaker 04

  Howard is a great guy, but I'm not allowed to talk to him.

• 45:30Joe Weisenthal?

  Okay.

• 45:30Tracy Alloway?

  Okay.

• 45:31Joe Weisenthal?

  Oh, really? Good to know.

• 45:32Tracy Alloway?

  All right, Paolo, thank you so much for coming on All Lots.

• 45:36Speaker 04

  Thank you for having me. It was very exciting.

• 45:37Joe Weisenthal?

  That was very fun. Thank you so much for coming in.

• 45:39Tracy Alloway?

  Yeah, thank you.

• 45:40Speaker 04

  Thank you.

• 45:40Joe Weisenthal?

  Yeah.

• 45:40Speaker 04

  Thank you.

• 45:54Tracy Alloway?

  Joe, that was so interesting. Obviously, there have always been a lot of questions swirling around Tether, so it was good to, you know, put some of them to the CEO.

• 46:04Joe Weisenthal?

  Can I say that when Tether reached out to us about, like, oh, do you want to have

• 46:08Tracy Alloway?

  Oh, yeah.

• 46:08Joe Weisenthal?

  the CEO on the podcast, I thought there was like at least a 50% chance that we were going to get, like, deep faked, that it was like going to be some North Korean hackers, and that we're going to like have to click into a link of that was like something that looked like the word Zoom, but that actually wasn't, and then enter a credential, and then there would be a video

• 46:26Tracy Alloway?

  Send your private keys.

• 46:28Joe Weisenthal?

  So like, yeah, really, you know, send your private keys. Here's an AI representation of Paolo Arda Doino. I'm still not sure. It could be that when this comes out, maybe we're going to hear. No, I don't think so, but maybe when it comes out.

• 46:40Tracy Alloway?

  At a minimum, we can, we can confirm the existence of Paolo, right?

• 46:45Joe Weisenthal?

  We can confirm that we talked to someone who looks a lot like every picture of Paolo Arda Doino, that we can confirm. No, I thought it was really interesting. You know, it's a big force. It seems like a pretty big, real, like, powerful entity within global finance.

• 47:02Tracy Alloway?

  Yeah, this is the thing, and I guess going back to where we started this whole discussion, again, like, 15 years ago or whatever, I don't think anyone would have expected that we're in a world where stablecoins are so large, and we're in a world where, you know, we're really preparing for stablecoins to become even bigger in the form of that stablecoin bill, putting in

• 47:26Joe Weisenthal?

  Yeah.

• 47:27Tracy Alloway?

  potential guardrails, that sort of thing.

• 47:28Joe Weisenthal?

  God, what a sick business model it is. I mean, let's just talk about it. It's so sick. They're making so much money for like no effort. And you're like, what's so complicated about the business? It's clearly not that complicated. They just hold a bunch of money and then they have a token. They just got to match it one to one and that's all. And then they collect the interest and they remit none of that to their holders. I do wonder, you know, I asked that about like that margin, whether it's going to compress. Paulo talked about, okay, in the U.S., maybe for institutional, that margin is important. You got to wonder, maybe someone will enter the non-U.S. markets with the idea. It's like, not only can you hold dollar assets, but we'll give you some, we'll remit that yield to you. But in the meantime, that's a money printer.

• 48:07Tracy Alloway?

  Printing money.

• 48:07Joe Weisenthal?

  Yeah, literally.

• 48:08Tracy Alloway?

  All right, shall we leave it there?

• 48:10Joe Weisenthal?

  Let's leave it there.

• 48:10Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 48:16Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the stalwart. Follow our guest Paulo Ardoino. He's at Paulo Ardoino. Follow our producers, Kermit Rodriguez at Kermit Armin, Dashell Bennett at Dashbot and Kale Brooks at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have all of our episodes as well as a daily newsletter. And you can chat about all of these topics 24/7, including crypto, in our Discord, discord.gg/oddlots.

• 48:44Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we check in on stable coins, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 49:45Speaker 07

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