The digital finance landscape is continually evolving, and a significant development is the recent collaboration between Tether, the world’s most widely used stablecoin issuer, and the TON Foundation, which could transform the way users interact with cryptocurrencies through Telegram, the encrypted instant messaging service. This partnership aims to integrate financial transactions into daily communications seamlessly, potentially turning the app into a dual-purpose tool that functions both as a messaging platform and a bank account. This vision was articulated by Tether’s CEO, Paolo Ardoino, at the Token2049 crypto conference in Dubai.
Tether’s integration with Telegram’s TON blockchain, which has undergone several transformations since its inception, marks a pivotal point in the relationship between the two entities. Initially developed by Telegram, TON had to part ways with the messaging giant following legal challenges from the U.S. Securities and Exchange Commission over its token sales. Despite these setbacks, Telegram’s commitment to TON didn’t waver, with plans to utilize the blockchain for ad revenue sharing announced earlier this year by Telegram’s founder, Pavel Durov.
The core of this integration lies in the appeal of TON’s blockchain and crypto wallet to Telegram’s vast user base, which numbers 900 million. The ease and efficiency of transaction capabilities that TON offers could attract a significant portion of these users, particularly in emerging markets where there is a substantial demand for storing wealth in stable currencies like the U.S. dollar. Tether’s USDT, backed by dollar-denominated assets, plays a crucial role in this ecosystem, offering a stable medium for these transactions.
However, the expansion into crypto transactions does not come without its challenges for Telegram, especially as it navigates its path toward a public offering and seeks profitability. Tether, in particular, faces scrutiny due to its popularity in illicit transactions and potential for sanctions evasion. The cryptocurrency has been under review by authorities in the U.S. and UK concerning transactions involving a Russia-based virtual exchange.
Despite these controversies, Tether maintains a strong compliance stance, working closely with law enforcement agencies across 40 countries and adhering to stringent sanctions regulations enforced by the Office of Foreign Assets Control. Tether has demonstrated its commitment to regulatory compliance by freezing assets when required by law enforcement, with more than $1.1 billion frozen since 2014.
Criticism also extends to the veracity of the reserves backing USDT. In response to past accusations and legal challenges, including a significant fine by the U.S. Commodities Futures Trading Commission and issues in New York, Tether has improved transparency regarding its reserves. Currently, the firm asserts that its stablecoin is overcollateralized, with substantial holdings in U.S. Treasuries.
The financial success of Tether, highlighted by last year’s $6 billion profit and strategic reinvestments, underscores its pivotal role in the crypto market. The company’s restructuring into four divisions—Data, Finance, Power, and Education—reflects its operational evolution and commitment to maintaining a lean financial profile, focusing on essential growth areas without lavish expenditures.
