(Bloomberg) -- Tether Holdings Ltd. sought to convince Turkey to use digital assets to overhaul the nation’s boron market, the latest sign of the crypto industry linchpin tapping the commodity sector for further growth.
Stablecoin issuer Tether pitched government officials on a proposal to use blockchain technology to create digital tokens that represent borate minerals, people familiar with the matter said, asking not to be named discussing private talks. Tether also raised the idea of establishing a digital-asset exchange in Istanbul, the financial capital, the people said.
The suggestion for boron coins falls into the nascent segment of tokenization, the process of using digital ledgers to generate representations of real world assets. Proponents argue tokenization can help to modernize some markets.
Boron products are mostly used to manufacture ceramics, detergents, fertilizers and glass. Turkey’s monopoly provider, state-owned miner Eti Maden Isletmeleri Genel Mudurlugu, estimates the country has over 70% of global reserves. The government predicts about $1.3 billion of sales in 2024.
Crypto Adoption
While it isn’t clear exactly why Tether has focused on boron and what benefits its proposal would bring, Turkey generally is alluring to digital-asset companies as high inflation and a sliding lira spur crypto adoption. The nation received almost $137 billion in crypto inflows in the 12 months through June this year, the seventh-largest figure globally, data from blockchain intelligence company Chainalysis show.
A Turkish government official said the boron proposal isn’t something that can be implemented at the moment, while a bureaucrat at the country’s Energy Ministry said the talks with Tether are at an early stage.
LinkedIn posts show that Eti Maden’s General Manager Yalcin Aydin is among the officials Tether’s local Expansion Manager Anadolu Aydinli met with in recent months. Others include Turkey’s Vice President Cevdet Yilmaz and Energy Minister Alparslan Bayraktar. The Turkish Energy Ministry and the Presidency’s office declined to comment.
In a statement, Tether’s Chief Executive Officer Paolo Ardoino said the company is “deeply committed to fostering innovation in Turkey’s digital-asset landscape” and keen to continue exploring new opportunities for growth.
Tether issues the world’s largest stablecoin, USDT, a token designed to hold a constant $1 value whose circulation has soared to $120 billion. The digital asset is the favored place to park funds for use in crypto trading.
The company also increasingly touts its surrogate dollar as a way to make payments more cheaply and quickly by curbing the use of traditional banking rails — especially in emerging nations where US dollars can be in short supply.
Expansion Managers
Aydinli is one of a coterie of expansion managers for Tether around the world, many of whom tied up with the company in the past year, according to LinkedIn profiles. The recruits for countries including Venezuela, the Philippines, Thailand, Indonesia and the United Arab Emirates, as well as for Africa and Latin America, underline the company’s ambitions to expand beyond its crypto roots.
“There’s growing interest in the use of stablecoins such as USDT for payments — especially cross-border payments,” said Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs.
Tether is already exploring lending to commodity trading firms to deploy some of the profits from its stablecoin operation. Those meetings included talks about how USDT could burrow deeper into payment flows for hard assets. Tether puts the funds backing USDT’s dollar peg in investments like Treasuries, and the interest earned fueled record profit of $5.2 billion in the first half of 2024.
There are signs of USDT gaining traction with commodity producers and brokers in countries like Venezuela and Russia that are subject to myriad US sanctions and lack ready access to the global banking system. The shift poses a challenge for the world’s regulators as they try to police money flows.
--With assistance from Sidhartha Shukla and Suvashree Ghosh.
©2024 Bloomberg L.P.