FILE PHOTO: Figurines with computers and smartphones are seen in front of Tether logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
DUBAI (Reuters) - Cryptocurrency firm Tether plans to move its headquarters to El Salvador, as the founders behind the world's biggest stablecoin look to capitalise on the Central American country's bid to become a hub for crypto trading.
Tether has emerged as a dominant force in the booming market for stablecoins, which are designed to maintain a constant value by being pegged to traditional currencies and offer users a way to move money between cryptocurrencies without being exposed to price swings.
CEO Paolo Ardoino told Reuters Tether would relocate to El Salvador after Tether recently got a digital asset service provider licence there, and that he and other management as well as co-founders were relocating to live there. The company was previously incorporated in the British Virgin Islands.
"This move to El Salvador will be the first time we're going to have also a physical headquarters," he said, adding, however, that the firm does not plan to relocate all of more than 100 staff, with working remaining predominantly remote.
The booming market for stablecoins has worried regulators concerned that growing stablecoin reserves expose the broader financial system to bigger risks, because they act as a bridge between the crypto universe and mainstream financial markets.
Tether has faced questions around its reserves and doesn't fully disclose where they are held and in what form. The firm says the vast majority of its stablecoin is backed by traditional currency reserves held with Wall Street brokerage Cantor Fitzgerald, whose CEO is Trump's nominee for the next U.S. commerce secretary.
"So, we have some liquidity on other banks, but the vast, vast majority of the TBills are in Cantor," Ardoino said.
BOOSTING MONITORING OF TOKENS
The company said last year it was increasing monitoring of how its tokens are used to combat illicit finance.
Asked whether Tether had considered alternative locations for its HQ, Ardoino said it lacked a licence to operate in the European Union and had ruled out the United States for now. It was "quite premature" to predict what sorts of changes Trump as president might make, he added.
The election of Trump as the next U.S. president sparked a rally to record highs for cryptocurrency prices. Trump has vowed to introduce a friendlier regulatory environment for crypto and said he planned to create a U.S. bitcoin strategic reserve.
El Salvador is seeking to become a hub for digital currency trading, and three years ago President Nayib Bukele made it the first country to establish Bitcoin as legal tender, alongside the dollar.
Tether's eponymous dollar-pegged token, USDT=CCCL (USDT) accounts for roughly two-thirds of the $212-billion worth of stablecoins in circulation, according to CoinGecko data.
The overall market has grown around 45% over the last year, the data show.
(Reporting by Federico Maccioni; Editing by Tommy Reggiori Wilkes; Editing by Sharon Singleton)
