Tether May Tokenize Equity To Ensure Liquidity For Investors: Report
The company is considering multiple paths to ensure liquidity for new investors eyeing a stake in the private stablecoin business.
Tether, the stablecoin company that issues the USDt (USDT) dollar-pegged token, is considering tokenizing investor equity and share buybacks to offer liquidity for investors as it seeks a $500 billion valuation.
Bloomberg reported on Friday, citing a source familiar with the matter, that Tether recently stopped an existing shareholder from selling their stake as the company is in talks to raise $20 billion for a 3% stake in the stablecoin's issuer business.
The investor sought to sell a $1 billion stake that valued Tether at $280 billion, Bloomberg reported. In response, Tether plans to offer investor liquidity through tokenization or share buybacks after the funding round closes.
Cointelegraph reached out to Tether but had not received a response by the time of publication.
Tokenizing a company’s equity can increase liquidity by making shares easier to transfer, fractionalize and borrow against. Onchain equity allows holders to maintain their positions while using a tokenized representation of their equity as collateral in decentralized finance (DeFi) applications.
Related: Tether solvency fears are ‘misplaced’ as company sits on large surplus: CoinShares
On Thursday, the US Securities and Exchange Commission (SEC) gave the green light to the Depository Trust and Clearing Corporation (DTCC), a clearinghouse and settlement company, to tokenize stocks, exchange-traded funds and bonds.“US financial markets are poised to move onchain,” SEC Chair Paul Atkins said on Thursday, adding, “Onchain markets will bring greater predictability, transparency, and efficiency for investors.”
Financial services company J.P. Morgan facilitated a $50 million tokenized bond issue for crypto investment company Galaxy Digital Holdings on the same day as Atkins’ announcement.
Crypto exchanges are also looking to expand trading of tokenized products, following the SEC’s nod to the DTCC and Atkins’ comments.
Source: CoinTelegraph
