Tether Enters Private Lending with $400M Fund Aiming at $3B

Tether, the company behind the largest stablecoin USDT, has ventured into private lending by launching a $400 million fund with Fasanara Capital. This new initiative is aimed at channeling USDT-based capital into private credit, with plans to grow to $3 billion once outside institutional investors are brought in.

The fund will lend to borrowers across more than 60 countries where dollar-denominated credit may be scarce or expensive through traditional banking channels. For borrowers in these markets, it's a new source of dollar liquidity; for Tether, this marks a shift beyond simply holding reserves and toward actively originating credit.

This move raises questions about how Tether's business is understood, particularly regarding the separation of risk between its private credit fund and the reserves backing every USDT in circulation. Whether these two businesses end up intertwined in investors' minds or remain cleanly separated remains to be seen.