Tether acquisition signals move into commodities

Driving the news: In a move that may seem unexpected for a company primarily known as a liquidity instrument for trading bitcoin and its progeny, Tether recently acquired a 70% stake in Adecoagro, an agriculture and energy company operating in Latin America.

• Adecoagro's been in business for more than 20 years, and generated around $1.5 billion in revenue last year from farming food crops and producing renewable energy from sugarcane.
• It calls itself one of the largest owners of productive farmland in South America.

Between the lines: "The bulk of our investments are companies that are furthering and expanding our distribution network," Tether CEO Paolo Ardoino tells Axios.

• That's distribution of tether, or USDT, the company's massive dollar-backed stablecoin.
• Many of those investments — around 90 made over the last several years — have been directed toward expanding street-level use of USDT by retail traders, but Tether's eyeing another giant market now, as the Adecoagro deal illuminates, Ardoino says.

The big picture: "The biggest reason in the next five years of growth for USDT will be commodity trading," Ardoino says.

• "In my opinion, commodity trading and all the international deals for commodity trading...will run on stablecoins," he says. Commodity traders tell them about the pain of using traditional finance.
• In November, Tether announced that USDT had been used in financing a trade of crude oil worth $45 million.
• The advantage of this, Ardoino explains, is that ships won't start loading oil until the wire clears. That can take days with payments as we know them, but USDT settles nearly instantly.

State of play: Tether first started talking about trade finance late last year, but having an actual commodities business gives it new leverage.

• Tether's clearest competitor, Circle Internet — the issuer of the world's second largest stablecoin USDC — confirmed its plans to IPO this week, aiming to raise over $600 million.

What's next: With Tether now steering it, Adecoagro will be looking to use stablecoins more as it sells rice, bio-ethanol and other agriculture products throughout its network.

The bottom line: "As of today, the adoption of USDT and the growth of USDT has been done very organically. In the number of hundreds of millions of users," Ardoino says. That got the stablecoin to a $150 billion market cap.

• Trade in food and energy and related products, he believes, can take it much further, and no other player in the space — that we know of — is looking in that direction.