Tether, the stablecoin issuer behind the USDt (USDT), is contemplating the tokenization of investor equity and share buybacks to enhance liquidity for investors while aiming for a $500 billion valuation.
According to a Bloomberg report on Friday, a source familiar with the situation revealed that Tether recently prevented an existing shareholder from selling their shares as the company engages in discussions to raise $20 billion for a 3% stake in the stablecoin issuer’s business.
The investor aimed to offload a $1 billion stake, valuing Tether at $280 billion, as reported by Bloomberg. In response, Tether intends to provide investor liquidity through tokenization or share buybacks once the funding round concludes.
Cointelegraph attempted to contact Tether but had not received a reply by the time this article was published.
Tokenizing a company’s equity can enhance liquidity by simplifying the transfer, fractionalization, and borrowing of shares. Onchain equity allows holders to retain their positions while using a tokenized form of their equity as collateral in decentralized finance (DeFi) applications.
Related: Tether solvency fears are ‘misplaced’ as company sits on large surplus: CoinShares
Tokenized finance is gaining steam as US regulators move to overhaul legacy financial tech
On Thursday, the US Securities and Exchange Commission (SEC) approved the Depository Trust and Clearing Corporation (DTCC), a clearinghouse and settlement organization, to tokenize stocks, exchange-traded funds, and bonds.
“US financial markets are set to transition onchain,” SEC Chair Paul Atkins stated on Thursday, adding, “Onchain markets will provide greater predictability, transparency, and efficiency for investors.”
Financial services firm J.P. Morgan facilitated a $50 million tokenized bond issuance for crypto investment company Galaxy Digital Holdings on the same day as Atkins’ remarks.
Crypto exchanges are also looking to expand trading of tokenized products, following the SEC’s endorsement of the DTCC and Atkins’ statements.
Coinbase, a US-based cryptocurrency exchange, is anticipated to announce its move into tokenized stocks and prediction markets as soon as Wednesday.
The company informed Cointelegraph that it would host a livestream to present new products but did not specify which ones would be introduced.
Tokenized public stocks are still in the early adoption phase, with approximately $700 million in public equities tokenized as of this writing, according to RWA.xyz data.
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