MHC Digital Group and Circle are expanding their reach in the digital currency landscape, with both companies focusing on providing greater access to stablecoins in the Asia-Pacific region. In separate efforts, MHC Digital aims to introduce Circle's USDC to institutional investors in Australia, while Tether’s USDT continues to grow as a critical financial tool in countries with unstable national currencies.
Tether’s USDT: From Cryptocurrency to Global Digital Dollar, A Lifeline for Many
Tether’s USDT, which began its journey as a simple cryptocurrency, has evolved into the most widely used digital dollar in the world. In a recent interview with Bullish CEO Tom Farley, Tether CEO Paolo Ardoino provided insight into the importance of USDT, particularly outside the United States. Stablecoins like USDT have become critical not only in the cryptocurrency markets but also in countries experiencing significant economic instability.
As the largest stablecoin by market value, USDT is now the third-largest cryptocurrency overall, with a staggering market capitalization of nearly $120 billion. In his interview, Ardoino emphasized the growing role of USDT beyond just crypto trading, especially in countries grappling with hyperinflation, such as Argentina and Turkey. For citizens in these regions, USDT serves as a stable alternative to their national currencies, which have lost value rapidly due to soaring inflation.
Stablecoins are cryptocurrencies that are tied to the value of a real-world asset, usually the US dollar, providing a haven of stability within the often volatile cryptocurrency space. While stablecoins are essential for traders looking to hold value in a digital form, Ardoino revealed that USDT’s utility has expanded far beyond its original purpose.
In regions where national currencies are unstable, USDT offers a lifeline. In countries like Argentina and Turkey, before USDT became mainstream, people had to resort to the black market to get dollars. Now, they can access USDT more easily, providing them with a more secure store of value.
In the United States, Ardoino notes, consumers have multiple layers of access to the US dollar through various channels, such as banks, credit cards, and digital wallets like Venmo and PayPal. In contrast, citizens of other countries, particularly those experiencing inflation, don’t have the same luxuries. The simplicity and accessibility of USDT fill that gap.
USDT’s significant presence is undeniable, with the stablecoin being more than three times the size of its nearest competitor, Circle’s USDC, which has a market cap of $35.6 billion. Over half of USDT’s issuance, approximately $61 billion, is conducted on the Tron blockchain, with $54.3 billion issued on Ethereum.
Ethereum, the go-to blockchain for decentralized finance (DeFi) applications, is known for its high transaction fees. Currently, a basic transaction on Ethereum can cost around $14.60. Tron, on the other hand, offers much lower fees, averaging just 20 cents. Ardoino explained the importance of this difference: “Imagine someone in Haiti who earns just $1.34 a day. How can they afford $5 for transaction fees? These markets cannot afford high transaction costs.” For users in developing economies, Tron’s low fees make it a more viable platform for accessing stablecoins like USDT.
USDT and the Global Economy
Another key topic discussed in the interview was USDT’s role in geopolitics and its substantial holdings in US Treasury bills. Backing USDT with US Treasury debt provides stability and liquidity, allowing holders to convert their USDT into dollars quickly. Stablecoin issuers, including Tether, have been aggressive in acquiring Treasury bills, particularly as China—the second-largest holder of US government debt—has been reducing its exposure.
Tether currently holds more than $100 billion in US Treasury bills, a sum that puts it on par with nations like Germany and South Korea in terms of US debt ownership. As Ardoino pointed out, “We added resiliency to the ownership of the US dollar, so now you don’t have one single country or decision maker that can sell hundreds of billions of T-bills at once.”
The substantial role Tether plays in the US debt market places the spotlight on the stablecoin’s importance not only in the cryptocurrency industry but also in the broader global financial system. According to Ardoino, USDT is now “the best friend of the US dollar,” offering a decentralized alternative for holding and transacting in dollar-denominated assets, particularly in regions where traditional financial infrastructure is lacking.
One of the most controversial aspects of Tether’s history has been the question of its reserves. In the early years, the company faced skepticism about whether USDT was fully backed by traditional assets. However, the situation has since stabilized, with Tether’s reserves now managed primarily by Cantor Fitzgerald, a respected financial services firm.
Cantor Fitzgerald CEO Howard Lutnick has publicly vouched for the integrity of Tether’s reserves, and the company undergoes regular attestations by a large accounting firm, similar to its competitors. Ardoino took the opportunity to address the lingering conspiracy theories around Tether’s reserves, dismissing them as baseless. “Whoever believes in these conspiracy theories should get out from their mother’s basement,” he said.
The market seems to agree with Ardoino. According to a contract on Polymarket, a prediction market, there is only a 4% chance that Tether will declare insolvency in 2024, a figure lower than the market’s belief that a nuclear weapon will be used this year (which stands at 9%).
MHC Digital Group and Circle to Expand USDC Access to Institutional Investors in Australia and Asia-Pacific
In related news, MHC Digital Group and Circle have announced a partnership aimed at increasing the distribution of Circle’s US Dollar Coin (USDC) to institutional investors in Australia and across the broader Asia-Pacific (APAC) region. This collaboration will enhance access to USDC, one of the largest and most trusted stablecoins, providing a cost-effective solution for high-net-worth individuals, hedge funds, and cryptocurrency businesses.
MHC Digital, under the leadership of its founder and executive chairman Mark Carnegie, aims to offer institutional investors access to USDC that is both efficient and cost-effective. The initiative will include the launch of an over-the-counter (OTC) trading service targeting a select group of clients in the region. By focusing on high-net-worth individuals, hedge funds, and cryptocurrency-related businesses, MHC Digital hopes to tap into a rapidly growing market in the Asia-Pacific region, where digital assets are becoming increasingly mainstream.
Carnegie, in an interview with The Australian Financial Review, emphasized the potential savings that USDC could bring to large institutional investors, particularly Australian pension funds. By using USDC, these funds could significantly reduce their foreign exchange (forex) trading fees, which are typically imposed by incumbent financial institutions like Macquarie Bank. He explained, "I’m hoping we can show there are hundreds of millions of dollars of forex trading fees, where super funds are getting their faces ripped off by Macquarie Bank and the other incumbent banks."
However, Carnegie also acknowledged that introducing stablecoins to pension funds might be challenging due to the traditional financial systems they operate in. Despite this, he believes that Circle is well-positioned to be a long-term leader in the regulated stablecoin market, adding, “Circle is the obvious candidate to be the long-term winner in the regulated stablecoin space.”
Circle’s chief business officer, Kash Razzaghi, echoed Carnegie’s sentiment, noting the immense potential of the APAC region for digital asset adoption. Razzaghi highlighted that the region’s youthful, mobile-first population, already accustomed to using digital wallets, is well ahead of the curve in embracing digital currencies. This presents an ideal opportunity for Circle to expand USDC usage, not just among institutions, but also among retail investors who are increasingly seeking alternatives to traditional financial services.
“With its young, mobile-first and digital wallet-ready population, the Asia Pacific region is ahead of the curve when it comes to digital asset adoption,” Razzaghi stated. His remarks underscore the unique positioning of Circle to capitalize on the growing demand for stablecoins in a region that has quickly embraced digital innovations.
In addition to facilitating the widespread adoption of USDC in the APAC region, MHC Digital and Circle are reportedly exploring the possibility of launching an Australian dollar-backed stablecoin. This move could further solidify Circle’s presence in the region and provide new financial tools to investors looking for stability in their local currency.
One intriguing aspect of this partnership is the potential creation of a Circle Australian dollar (AUD) stablecoin. While the partnership is currently focused on expanding USDC usage, MHC Digital’s potential collaboration with Circle to develop an AUD-backed stablecoin could open new doors for Australian investors. A stablecoin tied to the Australian dollar would offer local investors the benefits of blockchain technology while minimizing exposure to the volatility often associated with cryptocurrencies.
Such a development would not only cater to the needs of local investors but also position Australia as a hub for stablecoin innovation in the APAC region. The introduction of an AUD-backed stablecoin could reduce the reliance on traditional banking systems, streamline international transactions, and attract foreign investors looking to leverage the stable value of the Australian dollar.
Circle’s Global Expansion Continues
Circle has been rapidly expanding its presence around the world, particularly outside of the United States. While preparing for its initial public offering (IPO) in the US and planning to move its headquarters to New York in early 2025, the company continues to make inroads into international markets. This global expansion is part of Circle’s strategy to enhance the accessibility and utility of USDC, ensuring that it remains a leading stablecoin worldwide.
One of the most exciting developments for Circle is its involvement in Sony’s new Soneium blockchain. USDC has become one of the primary tokens used for exchange on this platform, showcasing Circle’s ability to adapt to new blockchain technologies and ecosystems. With these global partnerships and integrations, Circle is well on its way to cementing its position as the go-to provider of stablecoins and blockchain-based financial solutions.
