Investors think valuations are too high! Tether's funding goal cut from $20 billion to $5 billion, even the stablecoin leader is "backing down"?

The world’s largest stablecoin issuer Tether’s $500 billion valuation target faces investor resistance, followed by a significant reduction in funding expectations. Tether initially planned to raise $15 billion to $20 billion, but advisors are now considering lowering the funding amount to a minimum of $5 billion, highlighting market doubts about its sky-high valuation.

According to the Financial Times on Wednesday, Tether CEO Paolo Ardoino downplayed the funding scale in an interview, stating that the initial target of $15 billion to $20 billion was a “misunderstanding.” “This number is not our goal, but the maximum amount we are prepared to sell. If we don’t sell a single token, we would be very happy,” he said. This statement contrasts sharply with the company’s ambitious fundraising plans launched last year.

Investors are concerned about the $500 billion valuation, which would place Tether among top private companies like OpenAI, Anthropic, SpaceX, and ByteDance. Although Tether reported approximately $10 billion in profit last year, its 2025 profit is expected to decline 23% year-over-year, testing its profitability.

The cryptocurrency market has plummeted over the past six months, with traders pulling out of speculative assets, further dampening investor interest in overvalued crypto projects.

Valuation Disputes Are the Biggest Barrier to Funding

Sources familiar with the matter say that Tether’s advisors have faced significant resistance when engaging with potential investors. The $500 billion valuation target has sparked widespread skepticism, with private concerns about this pricing.

Ardoino defends the high valuation, comparing Tether to unprofitable AI companies. “The profits of AI companies are just as much as ours, just with a negative sign in front,” he said. “If you believe an AI company is worth $800 billion and there’s a huge negative sign in front, then so be it.”

Tether claims its profit last year was about $10 billion, mainly derived from returns on assets backing the USDT stablecoin. The company holds $185 billion in US dollar-pegged stablecoins, making USDT a reserve currency in the digital asset market. However, its 2025 profit is expected to decline about a quarter, which Ardoino attributes to falling Bitcoin prices.

Sources warn that negotiations are ongoing and funding terms could change. If the broader crypto market begins to rebound, investor sentiment might shift.

Regulatory Risks Make Investors Hesitant

Sources reveal that some potential investors are concerned about regulatory risks facing Tether. Since its founding in 2014, the crypto group has been scrutinized over concerns about illegal activities involving the token, as well as transparency and quality issues regarding its asset reserves.

In recent years, Tether has released quarterly attestations from accounting firm BDO Italia regarding its reserves, but has not undergone a full audit. Ardoino states that the company has shown potential investors “deep” tools to cooperate with law enforcement agencies.

S&P Global Ratings downgraded Tether’s reserve rating to the lowest level at the end of last year, citing increasing exposure to high-risk assets like Bitcoin and gold. Ardoino responded at the time, “We proudly accept your disdain.”

The new US stablecoin legislation signed by Trump, along with US competitor Circle’s public offering last year, has added momentum for Tether. Recently, Tether launched a new compliant token in the US. However, regulatory uncertainty remains a major concern for investors.

Profitability Faces Challenges

Tether’s profit structure is highly dependent on crypto market performance and reserve asset investments. Its 2025 profit is expected to decline 23% year-over-year to $10 billion, reflecting the direct impact of the crypto downturn.

Ardoino disclosed that the company earned about $8 billion to $10 billion from gold holdings, benefiting from rising precious metal prices. Since 2020, USDT’s rapid growth has made Tether one of the largest buyers of US Treasuries globally, and in recent months, a significant participant in the gold market.

These large-scale purchases have made Tether one of the most important links between the global financial system and the volatile crypto world. The company is controlled by a small circle of long-term executives, and insiders are reluctant to sell shares, which is partly why the amount of equity yet to be sold remains uncertain.

Tether’s efforts to attract prominent investors are seen as a barometer of interest in the crypto industry. This move is viewed as an attempt to strengthen Tether’s reputation and network, despite the company’s profitability and minimal need for additional capital. Digital assets gained momentum after Trump’s election, buoyed by promises of more friendly US regulation, but the market has fallen sharply over the past six months.

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