25 Sep, 2025
Stablecoin Giant Tether Seeks $500 Billion Valuation – What Challenges Lie Ahead?
Tether, the world’s largest stablecoin issuer, is considering raising $15–20 billion through a private placement, equivalent to about 3% of the company’s equity. According to a Bloomberg report on Wednesday (September 24), citing two people familiar with the matter, such a deal could value Tether at a level comparable to OpenAI.Shortly after the report, Tether CEO Paolo Ardoino confirmed the news on his official X account, stating that the company is “evaluating raising capital from a group of high-profile strategic investors.” He added that the funding would “multiply the scale” of Tether’s existing and new business lines, including stablecoins, distribution and adoption, artificial intelligence, commodities, energy, communications, and media.The financing is expected to take place through the issuance of new shares, without any existing shareholder divestment. Negotiations remain at an early stage, and details such as the exact fundraising amount could still change.Based on a $20 billion raise for 3% equity, Tether’s valuation would approach $500 billion—an unprecedented milestone for a crypto industry company. This would place the company’s valuation on par with global private-sector leaders like SpaceX and OpenAI. Earlier this year, OpenAI was valued at around $300 billion in a separate fundraising round.Tether, once accused of being the “preferred cryptocurrency for criminals,” has been working toward re-establishing its U.S. presence amid former President Trump’s favorable stance toward the crypto industry. Earlier this month, Tether appointed Bo Hines as CEO of its U.S. operations. Hines, a key architect of crypto policy under the Trump administration, helped advance the GENIUS Act. Tether has also set up USAT, a U.S.-focused subsidiary that will operate under the GENIUS Act regulatory framework.Meanwhile, the market capitalization of Tether’s USDT stablecoin has recently surpassed $172 billion, far outpacing its competitors. Circle, the issuer of USDC, holds second place with a market cap of about $74 billion. However, a dominant lead does not mean Tether can rest easy.Tether’s Market Leadership Conceals Underlying RisksA recent JPMorgan research report pointed out that the U.S. stablecoin market may be entering a “zero-sum game,” where new issuance merely redistributes market share rather than expanding the total market. According to the report, the stablecoin sector’s overall market capitalization stands at around $278 billion, with its share of the broader crypto market remaining below 8% since 2020.Despite this limited growth, new competitors continue to emerge. In addition to Circle, firms such as PayPal, Robinhood, and Hyperliquid are actively deploying diversified strategies to capture market share and challenge Tether’s dominance.Circle: Building an Ecosystem and Strengthening ComplianceFollowing the passage of the GENIUS Act, Circle has enhanced transparency and compliance measures to attract institutional clients. It is also developing the Arc blockchain to improve USDC’s liquidity and scalability, further bolstering its competitive edge in the stablecoin sector.PayPal: Leveraging Traditional Finance to Drive Stablecoin AdoptionIn 2023, PayPal launched its stablecoin PayPal USD (PYUSD) in partnership with Paxos Trust Company, ensuring transparent 1:1 dollar reserves. PYUSD is already available on Ethereum and Solana, with plans to expand to TRON, Avalanche, and Sei, enhancing its utility in global payments. PayPal also incentivizes adoption through reward programs, further growing its market share.Hyperliquid: Introducing USDH to Challenge Market LeadersIn September, Hyperliquid launched the USDH stablecoin, achieving over $2.2 million in early trading volume. Positioned within DeFi, USDH is designed to integrate with Hyperliquid’s native token economy to enhance liquidity and influence. Strategic partnerships with decentralized exchanges are expanding its use cases.Robinhood: Integrating Stablecoins to Boost Transaction EfficiencyRobinhood is exploring the launch of its own stablecoin to improve trading efficiency and user experience. Stablecoin integration would enable 24/7 settlement, enhance capital utilization, and lower transaction costs. Robinhood’s acquisition of Bitstamp also extends its footprint in crypto markets, laying the groundwork for a potential stablecoin rollout.Tether’s Internal ChallengesBeyond external competition, Tether faces significant internal challenges:1. Reserve Transparency Tether has long been criticized for insufficient transparency. While the company claims USDT is fully backed by reserves, it only publishes quarterly attestations rather than continuous third-party audits. Market doubts remain about the composition and liquidity of its reserves.2. Complex and Risky Asset Structure Tether’s reserves include not only U.S. dollars and Treasuries but also Bitcoin, gold, and other volatile assets. Although diversification may enhance returns, it also exposes the company to valuation risks and liquidity stress during market downturns.3. Governance and Compliance Gaps To meet regulatory demands under frameworks such as the GENIUS Act, Tether needs stricter financial management, auditing, and risk control. Its current governance structures and processes lack full transparency and standardization, which could expose vulnerabilities during compliance reviews or crises.4. Operational Complexity from Diversification Tether’s recent forays into AI, energy, and commodities may support long-term strategy but risk diluting management focus. This could place additional strain on its core stablecoin operations and risk management capabilities.ConclusionTether’s planned private placement could push its valuation toward $500 billion, marking a historic milestone in the crypto industry. However, its dominance is not without risk. The company still faces challenges related to reserve transparency, complex asset allocation, governance and compliance weaknesses, and operational pressure from diversification.Meanwhile, competitors including Circle, PayPal, Hyperliquid, and Robinhood are leveraging compliance, innovation, and strategic expansion to capture market share.Whether Tether can retain its crown will ultimately depend on its ability to strengthen governance and adapt to tightening regulatory landscapes.