WIRED: This year, Tether diversified its business model by entering venture capital. Tell me about the rationale.
Ardoino: Tether has become incredibly profitable over the past two years thanks to rising interest rates. When Tether started, you could earn 0.2 percent on the reserve, but today you can earn 5.5 percent. Of course, this may be time-limited — we hear about potential rate cuts — but even with inflation at 3 or 4 percent, it’s very challenging to get back to a 0.2 percent scenario.
Tether has amassed around $11.9 billion in profit over the past 24 months. For that amount, we could have distributed it all to shareholders to make everyone elated. Instead, some is added to the reserve to further support the stablecoin, and the rest is essentially held in an investment arm.
What is your venture investment thesis? It sounds like you look beyond the crypto industry.
We come from Bitcoin—we are Bitcoiners at heart. We may not be perfect people, but we strive to carry the Bitcoin ethos of financial freedom, freedom of speech, and freedom of access to technology into every venture we invest in.
The concept of decentralization can be applied to different areas, such as AI. We already see AI being very politicized. We believe that having a player that is independent of the classic actors — like Amazon, Microsoft, and Google — will be very, very crucial.
The same goes for another crucial technology: the brain-computer interface, or BCI. This will be fundamental in the future. Building brain-computer interfaces that respect people’s privacy—that ensure that data stays local and isn’t collected by the same companies that run social media platforms—will be very crucial.
We are not a classic VC. We are not throwing money at companies and trying to find a unicorn that will make us 100X. Sure, that would be nice, but it has to be aligned with our vision. Interdependence, resilience, and disintermediation — those terms are very crucial to us.
How much capital will Tether invest in venture investments?
We will always prioritize the stablecoin business because risk management is very crucial. We currently have a good buffer on top of the reserve, but if USDT continues to grow, we will expand it proportionally.
But almost everything else — I would say over 90 percent of Tether’s profit — we’ll want to reinvest in things that are crucial to us and our community. We don’t need to pay out gigantic sums of money in dividends.
Some VCs have misjudged the character of cryptocurrency founders, some of whom — like Sam Bankman-Fried — have subsequently been convicted of fraud. How do you plan to ensure Tether doesn’t make the same mistakes?
Looking under every stone and conducting the deepest due diligence is the only way to save your invested capital. Not every investment will be perfect, but we will approach each company with heart and mind to ensure maximum result.