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Now, our next guest is the biggest player in the stable coin space, Tether. He is Tether CEO Paolo Areno, and for this conversation, I do want to bring in as well Bloomberg Crypto and Digital Payments editor Mike Reagan, who sits here on set with us as well. Paulo, thank you so much for coming in and great to see you in New York. I know you're in Washington for the last couple of days here as the Senate addresses the Genius Act, which does call for federal oversight
of large stable coin issuers by the Federal Reserve. So I want to get your thinking. Will Tether, with its dominant USDT coin be compliant with this.
First of all, thank you very much for having me. We are very honored for the United States that he is the biggest country in the world to look at technology, to look to regulate the technology that we created in twenty fourteen, so is a very big step for us. And yes, we are very interested in seeing how the government of the United States is looking at regulating the stable coin technology. It's so important to us to see how the Genius Act is in fact distinguishing between foreign
issues and the domestic issues. We believe in the importance of USDT as the most use digital dollars in all the emerging markets in development countries. Right for a long time we have been advocating how stable coins are surely important also in the United States. But it's true that in the United States you have tens of ways to pay each other with xell, PayPal, bank accounts, credit cards, that be cards, cash, you name it. But if you go in emerging markets, there are three billion people that
are called under banks. They have been left behind by the traditional financial system. They need something that is stable in their lives, and that is the US dollar in a digital form that is USDT. So for US, the main interest will remain outside the United States, but also we are open to create a domestic issued a stable coin that will be competitive under the US economy.
I'm curious what are sort of the impediments to compliance that are so onerous for you to make USDT compliant in the US and for Europe for that matter. You know, one of the biggest requirements is that the reserves be treasuries and sort of cash like money marketing, mutual funds. You're doing that already, so I'm curious what sort of the impediment would be to make us TT compliant in the US.
And you're well, first of all, we are looking at the Genus Act in a way that will allow us to be compliant. So for US, it's very positive. So we can be compliant still having a strong focus on foreign markets because again those are the market markets that need us the most. When it comes to a local domestic stable coin, that you will have a different feature set than a foreign stable coin because again foreign stable
coin are used for remittancies and for savings. Thirty seven percent of the user base of usd T is using ust for savings. In the US, you would use stable
coins for payments to improve the efficiency of money. So when it comes to Mecca that you mentioned, the issue that we have with Mecca is the fact that Mecca is actually a lower bar than the GS in New SOCT we we are getting comfortable with the geniusc MECA instead would force US dollar stable coins to hold sixty percent of their reserves in uninsured cash deposits in European banks. That is a bad idea. The GENIUSS is pushing for one hundred percent in CASHAK equivalent with a strong push
towards US treasure. Is that is a great idea rather than uninsured cash deposits. We have seen how our major competitor in two years ago had a huge issue with Silicon Valley Bank having uninsured cash deposits here in US. So we learned from that lesson, and I think Europe is falling behind the regulatory work that the US is actually pushing in a better way.
You mentioned how you may issue a new stable coin for domestic use here in the US, so I'm curious where you are in that. Is this still in the conceptual stage, or if we're to liken this to a football game, is it in the first half, in the second half, in the extra time?
I would say it's closer to the second half. Of course, we want to see the Genius Act passing, because again we have a foreign stable coin that, by the way, is I think the most compliant stable coin when it comes to all KSCAML. We work with more than twe and fifty five law enforcement agencies across fifty different countries. So when it comes when we were talking about BSA, when we're talking about complying we work with directly with
the FBI. We onboard the United State Secret Services, We have a relationship with the departmental Justice, so all that is covered and that's you know, being foreign or domestic does not matter. We are going to comply and we are going to set the bar every day higher. But in general, we think that is important for the domestic one to one have a lot or diacty before moving forward, you know, pollo.
Obviously, stable coins were an invention of the crypto market. They were used for years. Tether used for years just as sort of that dollar stand in in the crypto markets. But now a lot of the excitement is for sort of non crypto uses, you know, payments, companies, FinTechs. Even in the Wall Street Journal today a story about a consortium of the big banks considering creating their own stable coin.
It feels like the competition's coming from all around you, and a lot of it seems to be centered on that idea of using it as just a method of payment, quicker, faster, cheaper money transacting outside of the crypto market and then just regular traditional business. How does tether fit into sort of that use of stable coins?
Actually, in twenty twenty. If you see the growth of the trend of growth of market coup of us team in twenty twenty with the event with the pandemic, that trigger all the people in the emerging markets developing countries to start holding USDT as their savings account and their checking account. If you are living in Turkey or in Argentina, the turkishly lost fifty percent eighty percent of its value
against the US dollar in the last five years. The Argentina payese lost ninety plus percent of its value against the US dollars. So for US in the last five years, us TA has always been as instrumental savings and the payment for one hundreds of minutes users. Today we have more than four hundred and twenty million users across emerging markets developing countries. We are growing at the pace of
thirty million new wallets per quarter. That is almost like we were a social network, and that is what is making USDT very unique. We are not worried about the competitors coming from the big banks and consorti of big banks, just because they will look at the Western world, they will look at how they can serve in a likely better way. They're existing customer base our customer base is
the thirty billion people that are unbanked. Those are not touched by the banking system because they are not generating enough rev news on a daily basis. So we feel that our market share will remain or will keep growing the next year.
So that's our competitive advantage in many ways. I want to talk a little bit about the run ins that you've had in the past to other's. USUT has been seized, it's been forfeited in criminal cases including fraud and terrorist financing. You've also, as I understand, it has never been audited. So what is the progress with securing a Big four auditor for a proof of reserves.
So the third of March twenty twenty five, so just a couple of months ago, we announced our new CFO that is a leader when it comes to contentioned audits. We don't think our should be considered concententious. It's very in our opinion, an audit of a stable coin like us ITT should be fairly easy. We have issues token he should tokens of the size of one on fifty two billion now, and we have very strong reserves. By the way, we keep our reserves here in the United
States with counterfait Gerald. They hold our US treasuries right, so we have more than one hundred and twenty bill in the US treasure is alone. We are not a nation, but if we were a nation, we would be the eighteen largest nation in the world. And so right now we are in discussions with different of the Big four auditors. We are in good progress. There is still a little bit of adjustment phase on their side because from the
previous administration that was very aggressive against crypto. The change from the current administration has been very, very dramatic, so they are going through the phase of adjustment. But the full audit is are our priority and I'm very.
Positive way full audit as in full financial audit in addition to vetting the reserves.
Well the reserves of the full audit of the reserves and also the auditors are will be looking at all our processes and all that, right, I think it's fair and is what people ask you.
Know, you often make news for sort of non stable coin type of investments, even companies that are not involved in crypto. I'm curious, how do you think of sort of the long term strategy is for Sattered. It almost seems like potentially to create a sort of holding company like a Berkshire Hathway type of holding company beyond stable coins. Is that a fair model, the type of sort of what the ambitions are in the long term.
So in the last three years the company generated around twenty billion dollars in profits, which less than five percent were distributed to the shareholders. The ass has been keppt in two parts, so we have two buckets. One is around billion. Seven billion dollars are kept in what we call access equity, so is additional equity on top of the one hundred percent reserves that we keep to secure the stable coin. And the ass around thirteen billion dollars
are used to do a different investments. Recently we invested in at the go Ago that is a lend the biggest land owner in South America. And someone could ask you the question why you did that. But if you look at first of all, part of our portfolio, investment portfolio has to be capped for stable long term investments,
maybe lower yield, but to steal very very solid. But the way we look at for example, that company and similar companies is the opportunity of starting to use stable coins and use it is specific for international commodity trading right, So we have been in talks with a lot of the commodity traders recently in the last year. They are all upset with their banking partners because their banking rails are becoming lower and lower, and so efficiency is very
very important when it comes to commodity trading. So stable coins usdity is the choice for them for making their portfolio much more efficient. So we are making investments also to test the dases and grow our user base and market cup over time.
Tyler CEO, really appreciate you joining us. Paolo Ardoino, thank you very much for coming in today. And Bloomberg Michael Reagan. Great conversation.