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In 2023 Tether, the issuer of the stablecoin USDT, surpassed the world’s largest asset manager, BlackRock, in terms of profits. What seemed improbable a few years ago is today a reality that challenges us. Indeed, this contrast between traditional finance and cryptocurrencies illustrates a paradigm shift in the way investors perceive stability and profitability. While USDT dominates the stablecoin market, Tether has been able to use this momentum to record historic performance.
Tether overtakes BlackRock: The numbers that speak
In 2023, Tether generated a profit of $6.2 billion, an amount that allows it to surpass the $5.5 billion earned by BlackRock, a manager of $10 trillion in assets. That’s a $700 million gap in favor of the stablecoin issuer. This difference is partly explained by the significant growth of USDT, which today represents 75% of the market capitalization of USD 119 billion. Indeed, Tether has focused its investments on assets such as US Treasuries, Bitcoin and gold, allowing it to generate high returns in a volatile economic environment. This efficient asset management, combined with a lean structure with less than 100 employees, has resulted in unprecedented profits per employee.
The rise of Tether is closely related to the growth of the stablecoin market, which is seen as a more stable solution to the volatility of traditional cryptocurrencies. As a leading stablecoin issuer, Tether has been able to capitalize on this trend, as stablecoins are now seen as one of the main drivers of the transition to more decentralized finance. In addition, stablecoin issuers, the largest of which is Tether, are now among the 20 largest holders of US Treasuries, a strategic position that gives them increasing influence over traditional financial markets, including the stock market.
Efficient economic model and ambitious prospects
Unlike BlackRock, which manages massive and diverse assets in publicly traded companies, Tether has taken a more focused and agile approach. The company invested in highly liquid assets, including short-dated US Treasuries, with operating costs constrained by a small, high-performing team. This strategy, along with the growing demand for USDT on crypto exchanges, has allowed Tether to maintain an exceptional level of profitability. According to its CEO, Paolo ARDOINO, “The small size of our structure allows us to be extremely profitable per employee”, a key factor contributing to their success in 2023.
BlackRock’s strategy, while different, remains influenced by the rise of decentralized finance. With the rise of stablecoins, traditional asset managers are facing unexpected competition, which could force changes in how they allocate their resources in the future. The outlook for Tether is also promising. The stablecoin market continues to grow. Thus, the company seems poised to strengthen its influence, especially in global cryptocurrency regulatory discussions.
Tether’s record profits in 2023 illustrate the rapidly changing global financial environment. As traditional finance, epitomized by giants like BlackRock, continues to dominate the stock market, cryptocurrencies and stablecoins are beginning to play an increasingly important role. Tether’s results show that agility and adaptability can overcome the size and complexity of the biggest players in the market.
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A graduate of Sciences Po Toulouse and holder of the blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. Every day I try to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations and put into perspective the economic and social problems of this ongoing revolution.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.