Tether's CEO Speaks on His Insanely Profitable Business
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Bloomberg Audio Studios. Podcasts. Radio. News. Hello and welcome to another episode of the Oddlots Podcast. I'm Traci Alloway. And I'm Joe Weisenthal. Joe, it is April here in New York. That's right. It is my 10-year anniversary at Bloomberg. This month? This month.

Oh, that's awesome. You're going to get a pylon. That's great. 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. Are you happy about how it all worked out? I can't complain. Okay, good, good. I will say it was a bit rocky in the beginning, but we worked it out. Where's this going? Okay. In that 10 years, a lot of things that I would never have expected to happen have happened. Okay.

Yes, go on. 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

of stable coins. So you look at something like Tether, the world's biggest stable coin. We talk about it in the same sentence nowadays as euro dollars, 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. 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. It's like they're a bunch of scammers. They can't pass an audit. The money isn't there, et cetera. It's going to go away. Why would you ever hold a Tether? We asked Sam Bankman for that years ago. Why would you hold a Tether when there are other companies that have done audits, et cetera? 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.

Oh, totally. The other thing I thought was that U.S. officials were never going to grow comfortable with the idea of a loosely regulated foreign company creating synthetic dollars. But, you know, the Trump administration seems to have some other ideas. So we

We should talk about all of that. Let's do it. We have the perfect guest. We do have the perfect guest. We're going to be speaking with Tether CEO Paolo Arduino. He is, of course, the head of the world's largest stablecoin. So, Paolo, thank you so much for coming on the show. Thank you for having me. I'm very excited to be here today.

So just to begin, has Tether's growth surprised you? Did you ever expect to ramp up to this degree? So I joined Tether very early. It 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 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.

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 employees 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.

Yeah, I think it's definitely extraordinary. I defined 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, name another company, another fund or whatever that distributed less than, I 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 set in tether to be able to reinvest 95% of its profits in keeping growing its distribution network for the U.S. dollar.

and also invest in other pretty cool things from artificial intelligence, Bitcoin mining, and the tens of other opportunities around the world. - So you mentioned distribution of the US dollar, and there is some tension there, right? I mentioned earlier that I never thought regulators were gonna 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? 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 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. 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, in a digital form. We have millions of touch points 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 Southern 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 the United States. 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 the United States is not there. So what Tatar is doing in those countries is purely building that infrastructure and trying to, in a way, combat, actually more than in a way, 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. 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 Tether is the best ally for the United States, is the company that

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. Joe, I got to 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. Correct.

Is the ambassador for U.S. president. Is the bulwark against the end of the dollar. Yeah, well, history can be funny in that respect. Why haven't you ever been audited? So in the past, with the past administration, last four years, I must say that was not audited.

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 latter 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.

Just real quickly. So obviously you hold your money or a lot of your assets that you hold are with Cantor Fitzgerald, its former CEO, Howard Lucknick, 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 U.S.?

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 people that support what you're doing. 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, Simon.

went through multiple contentious full audits across his entire career. I don't think that their audit should be contentious, but given, again, the complexity and 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.

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 time frame for when you might do that?

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 discussion. So it's crazy. The administration changed two months ago.

And we are already in discussions with big four auditing firms. So that is the best thing that I can say. And again, the fact that we hired a new CFO and that has the highest experience in the sector to get through audits is something that should reinvigorate our position.

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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 you also 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. It seems simple. You just count up the treasuries and count up the tokens. And if they match, what are we missing here? 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 counterfeit jail. That is a very highly regulated financial institution here in the U.S.,

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 counter 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 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 research, but we just want to get the full audit done. 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 can just buy into and not have to think about that part. Why the preference towards the direct holdings of the bills and bonds?

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 infinity liquid repo market. So we think that is in case of a 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 a big issue with Silicon Valley Bank. They kept uninsured cash deposits there. In 2022, Tether was attacked by...

funds that were clearly trying 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% of our reserves and $20 billion were around 20 something percent of our reserves. So

I mean, if you look at Washington Mutual and many other banks that failed from 2008 and after, there was no bank that was able to support the 10% bank run. And we did it with flying colors. We could have gone to till the end.

That's what it 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.

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?

So the concept of peg is interesting, right? People refer to the peg as, you know, if USDT or another stable coin 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. 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

$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 7 billion are specifically at 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...

And 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. And if you look at our other competitors, they keep, you know, some peanuts on top of their reserves. 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, collected days worth of yield, whatever. 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 and what you pay out can sustain itself with competition or will it inevitably compress?

So you make a very good point, but I think that the issue there is that you would be right if stablecoins in general would be a product made for the United States. Stablecoins are not a product made for the United States. Sure, stablecoins can work in the United States. Stablecoin can be used as a faster settlement system across the interbanking settlement system.

But the reality is that Tether never focused on institutions. Institutions would betray you for one basis point. They would go... 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 and developing countries, where if you think about Turkey, if you think about Argentina, if you think about other countries,

The national currency of these places has been devaluating very, very fast against the US dollar. So in Argentina, I think that peso Argentina in the last 10, 12 years devaluated 98% against the US dollar. And the Turkish lira devaluated 80% against the US dollar in the last few years. So

Last year in 2000... So you're saying that 4% doesn't matter to them? Yes, because the intraday volatility of their national currency is higher than 4%. So why does it matter to them? And they will stay with you. They will be loyal with you as long as you...

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's 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.

I take the point that Tether is not necessarily aimed at the U.S., 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?

Again, the countries where we operate and where we are more successful is, you know, the US top costs are not necessarily that present, right? As I said, Tether invested half of its portfolio and half of its own equity, right?

So outside the reserves of the stable coin, we invested in building our distribution network. So we are building millions of touch points across the world. You know, one interesting example is, you know, we came across the concept, well, 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 called

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 $80. And so this is like three USDT are a good compromise to have electricity at home with these very good batteries. So this is an example of how we... And we have already 300 kiosks. We are planning to ramp up to 10,000 kiosks by the end of 2026. And

100,000 kiosks by the end of 2030. So the idea is that by 2030, we can serve around 60 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 Germany. And just to finish,

We have with that company, not only we are changing and we're pushing the adoption of the US dollar, it's a great example of a change that you will see from space because if you see Africa, it's very dark during the night because they don't have electricity. But if you power up 60 million people, that will change and that is a significant change. ♪

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Learn more at www.kpmg.us slash insights.

Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? A combination of financial services and generosity programs. Thrivent offers advice, investments, insurance, banking, and generosity, as well as resources to fund service projects or direct dollars to causes you care about. With more than 120 years serving clients, you can plan your finances with confidence. Visit Thrivent.com to learn more. Thrivent.

where money means more. There is an effort right now to regulate

regulate stable coins in the law, et cetera. If this passes, there's something called the Stable Coin Legislation, the Genius Act, I think it's called, and who can issue a stable coin, a federal qualified non-bank payment stable coin, something by the OCC. The Genius Act for stable coins, for stable geniuses, right? Yeah, right. The subsidiary of an insured depository institution, a state qualified payment stable coin. 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 stable coin under this law? Or would you choose to just like, you know what, the U.S. isn't where our activity is? Right. So let me elaborate on the answer. It has multiple point of views. Yeah.

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

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

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 worked on more than 400 operations with US law enforcement. Across the globe, we work with 230 law enforcement agencies across 50 different countries.

So when in the proposed Genius Act, there is the requirement of stable coins, even foreign stable coins, because USDT would remain potentially an international stable coin, 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 being contacted by law enforcement. But on top of that, among our people, we have probably the most impressive number

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 Guarantex. 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. It's a very good collaboration. We received, I think, a couple of weeks ago, 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 a domestic stablecoin, you need to work within the US parameters of sanctions and law enforcement. So...

We believe that it's important for unstable coins to work with US law enforcement, but at the same time, the US domestic stablecoins and foreign stablecoins 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 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 a 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, PayPal, Cash App, and 600 gazillion ways to pay each other.

How big is your investigations team?

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 Bybit hack 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. 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? So here's the thing, right? So sure, blockchains are transparent and they're not necessarily anonymous. They're pseudonymous.

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 peak butchering network- Oh, I forgot about this. Yeah, that was converting or using USDT. And that was on all the newspapers then eventually.

It ended up that Tether was the company that initially found out that there was this big butchering scheme and then contacted 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 a romance scam happens when

You might have a girl contacting a guy online, asking for some money to pay the rent and whatever. It's crazy that this amounted to $200 million, but it is what it is. But this girl that contacts the guy 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 wiped and the payment processor fails to recognize the issue and all that. 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.

That all makes sense to me. However, you know, the definition of what's criminal can be a spectrum. It can change by culture, can change by time. So, for example, in the U.S., 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 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?

Very good point. So first of all, it's a matter of education, right? I met with the finance minister last year and I thought working in that meeting, I thought, well, he will be very annoyed for what we are doing. I will not name the country, 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 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

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, it's $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 the traditional remittances companies, they charge from 6% to 28% to move money forward.

So that is something that really well resonates with other country prime ministers, with institutions in these countries and so on. So in our point of view, we need to work primarily with U.S. law enforcement and with European law enforcement. And we tend to not work with the tyrannical countries' law enforcement. 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 it 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? So our reserves are in the majority, quite high majority of U.S. treasuries short term. We have a bit of gold and we have a bit of Bitcoin.

The reason 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're 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 the message we want to give. I mean, it is important to 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.

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? Yes, could be. I mean, I'm sure that this will sound like an obvious and well-crafted answer. 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 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 uh within the hill and everyone has been incredibly receptive 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. Very high-minded. 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? 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. 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 of our relationship.

Plus, you have a friend in the White House, right? Howard is a great guy, but I'm not allowed to talk to him. Okay. Oh, really? Good to know. All right. Paolo, thank you so much for coming on All Thoughts. Thank you for having me. It was very exciting. That was very fun. Thank you so much for coming in. Thank you. Thank you. Thank you.

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. Can I say that when Tether reached out to us about that, like, oh, do you want to have 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 of some AI. So like, yeah, I really, you know, send your private keys. Here's an AI representation of Palo Alto Duino. I'm still not sure. It could be that when this comes out, maybe we're going to hear. No, I don't think

I think at a minimum, we can confirm the existence of Paolo, right? We can confirm that we talked to someone who looks a lot like every picture of Paolo Arduino, that we can confirm. No, I thought it was a really interesting conversation.

you know, it's a big force. It seems like a pretty big, real, like powerful entity within global finance. 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...

where stable coins are so large. And we're in a world where, you know, we're really preparing for stable coins to become even bigger in the form of that stable coin bill, putting in potential guardrails, that sort of thing. 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 asking 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. Paolo talked about, OK, 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 ideas 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. Printing money. Yeah, literally. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Jill Wiesenthal. You can follow me at the stalwart. Follow our guest, Paolo Arduino. He's at Paolo Arduino.

Arduino. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashiell Bennett at Dashbot, and Cale Brooks at Cale Brooks. For more OddLots content, go to Bloomberg.com slash OddLots, where we have all of our episodes as well as the daily newsletter. And you can chat about all of these topics 24-7, including crypto, in our Discord, discord.gg slash OddLots.

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