Tether, the stablecoin company that issues the dollar-pegged token USDt (USDT), is considering tokenizing investor equity and share buybacks to offer liquidity to investors because it targets a $500 billion valuation.
Bloomberg reported on Friday, citing a source conversant in the matter, that Tether recently blocked an existing shareholder from selling his stake as the corporate negotiates to boost $20 billion for a 3 percent stake within the stablecoin's issuer business.
According to Bloomberg, the investor desired to sell a $1 billion stake, valuing Tether at $280 billion. In response, Tether plans to supply investors liquidity through tokenization or share buybacks after the funding round closes.
Cointelegraph reached out to Tether but had not received a response on the time of publication.
Tokenizing an organization's equity can increase liquidity as shares are easier to transfer, split, and borrow. On-chain equity allows holders to take care of their positions while using a tokenized representation of their equity as collateral in decentralized finance (DeFi) applications.
The differences between tokenized equity and shares issued through the standard economic system. Source: Cointelegraph
Tokenized finance is gaining momentum as US regulators look to overhaul outdated financial technology
On Thursday, the US Securities and Exchange Commission (SEC) gave the Depository Trust and Clearing Corporation (DTCC), a clearing and settlement company, the green light to tokenize stocks, exchange-traded funds and bonds.
“U.S. financial markets are poised to maneuver to on-chain,” SEC Chairman Paul Atkins said on Thursday, adding: “On-chain markets will bring greater predictability, transparency and efficiency to investors.”
Source: Paul Atkins
Financial services firm JP Morgan facilitated the issuance of a $50 million tokenized bond for crypto investment firm Galaxy Digital Holdings on the identical day as Atkins' announcement.
Crypto exchanges are also seeking to expand trading in tokenized products after the SEC approved the DTCC and Atkins' comments.
Coinbase, a US-based cryptocurrency exchange, is anticipated to announce its expansion into tokenized stocks and prediction markets as early as Wednesday.
The company told Cointelegraph that it will host a livestream to unveil recent products, but didn’t specify which products could be unveiled.
According to RWA.xyz, tokenized public stocks are still within the early stages of adoption. At the time of writing, nearly $700 million price of public stocks have been tokenized.
