Tether Enters $3 Trillion Wall Street Debt Machine with New StableFund

Tether is expanding its reach into the private-credit market through a new fund called StableFund, which will allow it to finance businesses and consumers in the real economy. The fund has $400 million in combined sponsor capital from Tether and London-based Fasanara Capital, with plans to raise up to $3 billion more from institutional investors.

The expansion takes Tether beyond its existing dominance of the crypto lending market, where it controls around 60% of the $23 billion centralized market. Galaxy Research estimates that Tether has roughly $13.5 billion in outstanding secured loans at the end of June.

Private credit's boom is running into a tougher test as defaults and withdrawals strain the industry. Defaults reached their highest levels since at least 2021, while Blue Owl Capital saw its default rate rise to 2.8% in the second quarter, its highest in at least five years.

The Financial Stability Board (FSB) has warned that private credit has yet to be tested through a prolonged economic downturn and highlighted weaker borrower quality, high leverage, opaque valuations, and growing links between private funds, banks, and insurers as potential vulnerabilities.