The Wolf Of All Streets - How Tether Crushes FUD And Embarrasses Haters While Making Billions | Paolo Ardoino, CTO Of Tether

Episode Date: April 9, 2023

Join us as Tether's Chief Technical Officer, Paolo Ardoino, shares insights on why Tether has proven to be the most secure asset in the volatile crypto market. In this episode, Paolo delves into how Tether weathered the storm during the recent crypto crisis and discusses the worst-case scenario for the stablecoin. He also provides an in-depth explanation of Tether's peg and sheds light on its innovative approach to maintaining stability. Don't miss out on this informative and engaging conversation with one of the industry's leading experts. https://twitter.com/paoloardoino ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/ ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget ►►NORD VPN GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/ Follow Scott Melker: Twitter: https://twitter.com/scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #trading Timestamps: 0:00 Intro 1:24 How Tether survives the crypto turmoils 5:10 Banking crisis 11:00 Exposure to T-bills 13:44 Black swans 18:20 Stablecoins is a killer app for crypto 22:00 What is a peg? 25:05 Could USDC blow up? 30:00 Worst-case scenario 34:50 Bitcoin mainstream adoption 40:15 CBDCs: a threat to Tether? The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

In 2022, we saw a number of crypto platforms collapse. It's not even worth mentioning all their names at this point. But you could argue that no company has taken and endured more scrutiny than Tether. But this quarter, they made $700 million. Their market cap has increased by billions and they seem to be the big winner of all of the contagion, including the collapse of actual United States banks. I talked to one of my favorite consistent guests, Paolo Arduino, about everything that's happening at Tether, how they came out on top, and how they've managed to continue to grow the business in the face of so much adversity. Paolo, I think you're going to need to rename yourself Neo, like the Matrix,

because of your ability to dodge every single bullet that's thrown at you. It's been never-ending FUD and bad news around the industry, about Tether, about stablecoins, yet your assets just keep rising and you guys keep chugging along. What's going on, man? I think that the fact that we have been so scrutinized and we have been, I think really the company most scrutinized in the world at this point. We have dealt with all the regulators that ask us questions.

We have provided so much information. Uh, we have proven, you know, with the tens of billions in your dentures, just a few days, um, and a couple of weeks at maximum last year that our banking was solid, that our serves were solid. And today, right, so it's the last day of March. And so it's the closing of the first quarter of 2020. We announced that the last quarter of 2022, we made in profit $700 million. And this quarter, we are on track to beat that quite heavily. And that money is staying in the company. So the majority of that money is staying in the company. So we have now around $80 billion as reserves, plus we have an additional 1.6 to something more

in additional reserves that is our company equity. So I think we proved with so many actions, we dodged all the bullets, we have provided transparency, we have been a good asset for the industry. We keep developing opportunities for Bitcoin. We really are simple people committed to a mission. So I think, I don't know what we can do more. I think that there are many things that we can do better.

I think we want always to get better as any human being um but uh i'm pretty pleased that for so many times that tether you know has been given for dead um and uh we have seen you you know, Terra, Celsius Voyager, Genesis, FPX, and, you know, BlockFi and so many other companies actually being that, you know, they were considered the heroes of the industry. And the tether was always considered like the black sheep, like a bunch of, you know, random guys, you know, making risotto of, you know, cooking pasta and then having to deal with the billions, right? So in the end, we demonstrated that we didn't have exposure to the US banks that crumbled

in the last weeks. We there isn't a single, right? So keeping us in poor cash in a bank deposit is extremely naive, especially at this moment in time. And so we just have a important exposure to TBLs. We use their in-premarket to protect ourselves. And the good thing about TBLs is that whatever happens, there are securities. So you are secured as an investor. So they will

always recharge to you. That's the way to protect your customers and users, in my opinion. Trey Lockerbie So you obviously mentioned FTX, Voyager, BlockFi, Celsius, the endless list somewhat of crypto companies, as you said, that were heroes and failed over the last year. But I think what a lot of people didn't have on their bingo card was Silvergate Bank, Silicon Valley Bank, Signature Bank. Now we're really seeing a lot of the things that the crazy Bitcoin, quote unquote, conspiracy theorists screamed about for years, is that banks can collapse too. Fractional reserve banking doesn't work in the era of social media and fast information transfer because people can try to withdraw $42 billion in 24 hours, which is obviously what we

saw. So how... I mean, you talked about being in T-bills. Your competitors were not, right? So we sort of saw USDC wobble a few weeks ago because they had over $3 billion in one of those banks that I mentioned. Did you take your money out of those banks or were you already approaching it as if banks are risky and that was your strategy in the first place? Because I think it caught a lot of people off guard that now you have to worry about not only is your stable coin backed, but is the bank where your stable coin is banking backed? Stig Brodersen Yeah. Look, we didn't have real exposure. We didn't have any direct exposure to Silicon Valley, Silvergate, and Cinture. So we have been always careful in, you know, leaving all the money in on US banks, honestly, because we have seen what happened in 2007, 2008. That was how Bitcoin started, right? is because there was this technology and idea and currency and philosophy created, you know,

because everything that happened in 2007, 2008. And then you can argue that, okay, after that, Bitcoin started growing and you would imagine that banking would become smarter, right? So instead, you know, how a bank like Silicon Valley could have so much invested in municipality bonds. So it's like you are invested in 10 to 30 years municipality bonds that yield 1.5% per year. And of course, what happened there is that in 2020, when the US debels were yielding zero, these banks were always trying to create an interest or gain an interest from their investment. So they have to go with something riskier.

But you remember, you and I spoke a few times already now, right? And you remember that at that time, you know, Tether had the commercial papers. You know that those commercial papers were written A1 over A3, so they were yielding, you know, 20 basis points compared to 1.5% of the more recent public bonds that these two aspects were yielding. So for all the accusations that Tether had, even when we had the commercial papers, they were three to six months to maximum nine months maturity. So super short maturity. Plus, they were yielding much less.

So the interest is related to the risk, right? So higher risk, higher interest., as simple as that. It's simple math. So we were extremely, well, I shouldn't say we were surprised, but in the end, we were not surprised that in the end, these banks were again doing the same mistakes that were made in 2007, 2008, or they came to life in 2007, 2008. So yes, so Petr always was careful and is careful in picking its banking partners. For us it's extremely important. Plus he's extremely careful on how much cash, uninsured cash will leave in a bank, right?

So of course, that is, I think, the key. If the bank goes bankrupt, you have to have the guarantee that you can get all your money back. And so that plus the fact that we are coaching to have 1.6 billion additional equity, it's giving us the comfort that whatever happens to our banks, we are going to be safe. And that is the best thing you can do because we have seen what algorithmic stable coins were capable of, right? So everyone now says, we have to go back to algorithmic stable coins. Sure.

Did you already forget what happened to Terra Luna? I mean, the problem with algorithmic stablecoins is that as soon as they become big, as soon as they become like significant in terms of size, there is no space to liquidate their collateral and their collateral is another token that, you know, if you find 100 buyers on the market, you're lucky. So instead, I mean, if my point is if you want to recreate the dollar, right, and you want to make it big, you have to use the banking system. You have to have something as your reserve that is matching the underlying or the the peg currency that you want to represent. That would be the dollar.

In our case is USD bills, we cannot have 100% of the portfolio in Japanese yen or in Japanese yen bonds. Doesn't make sense, right? Because we are representing the dollar, how we can guarantee that we can redeem if we have an enormous exposure to something else. Preston Pyshko Yeah. You talk about having to be insured for your deposits. I mean, in the United States, FDIC, well, we'll see now moving forward, but $250,000 per account, there's about 4,000 banks

in the United States, which means that if Tether were to put a insured amount in each amount, you'd be able to get to about a billion dollars if you put $250,000 in every bank in the United States. So that displays exactly the problem that you're saying here, right? If you want to make sure that your reserves, which are in a bank, are fully backed, you would literally have to bank in every bank in the world that had any sort of insurance

and still not be able to get there. So it makes the math almost impossible. You talk about then going into T-bills, which obviously is considered the least risky asset arguably on the planet. But what prevents you guys from getting trapped also in T-bills that were yielding 1% or 2% when the rates go up to 4% or 5%, which is obviously why we saw some of these banks fail? Well, the point is using short maturity T-bills, right? So of course, if you go you go on 30, 10-year to 30-year T deals,

the yield curve is extremely steep there because you are in a situation where, you know, over one year, the Fed can change the interest rates really dramatically. But in the course of a few months, that will never happen unless the Fed tomorrow decides to hike the interest rates to 10% in one month, that the entire system will collapse. But at the same time, on the Tether side, we are growing this enormous buffer.

That's why this buffer is there, right? That's why we keep accruing a buffer in Tether that is our own capital, that is there to protect for the unforeseen events, right? So that is also important. So short maturity TBLs so that you are protected from the interest rate spikes and potentially, you know, hiking or additional hike of interest rates. I can tell you that, you know, in 2022, this is a great example, right?

In 2022, Terra Luna situation, we have to pay out $7 billion in 48 hours. We use the T-deals, we sold the T-deals, Tico Zero in the market, we know slippage, no problem at all. We didn't lose a dime. and we were able to pay out daily all $7 billion in 48 hours. So I think that is a great example of risk management. Once again, keeping an enormous buffer in the billions of dollars as part of the company

equity to protect our users. Stig Brodersen So you could almost argue that you're over collateralized because of the company equity to protect our users. So you could almost argue that you're over collateralized because of the extra equity and money that's sitting there accessible if something happened, but it would take quite a black swan. But it's interesting, the idea, I think it was Talay Abinanti Fragile, who's now of course a Bitcoin hater,

but the idea is that people, when they manage risk, generally only manage risk based on the black swans or terrible events that they've seen in the past, but not looking forward to the completely unforeseen ones that were not predictable, that could really explode the system or become massively problematic, which is why risk management generally fails for these banks and such. They're looking at 2007, 2008, what happened there? Let's protect against it.

But they're not ready for the problems of 2023. Are there any huge potential things you could see that could happen in the future that nobody's accounted for that could become problematic for you, for the banking system, for any of them? Well, I mean, the good thing about Tether is that Tether has to do what the dollar does, right? The US dollar does. So it's not that we have to has to do what the dollar does, right? The US dollar does. So it's not that we have to protect from the inflation of the dollar, right?

So we have just to represent and keep representing the dollar. So in a way, our job is simple, right? And also, we should never go in fresh and unreserved, right? So that is the other important thing. I think both the scrutiny that we had, but also the original idea of Tether. Remember, we as Tether created the entire cost of the stable coins, right? The entire idea is if everyone wants to get the money back, you have to give it back to them. And so that's exactly what Tether is about. It's about, you know, before the interest rates hikes, Tether was making for sure good money, was profitable, but was not this profitable.

Of course, we could have gone long Tesla, right? So someone could say, well, you know, you have so much money, go long Tesla. But that's not the purpose. The purpose is keeping that money safe. And that's the entire problem with fractional reserve. So I understand why banks are doing fractional reserve because they can create so much additional money to make the economy still more, right? So if you are like, for example, a bank in the US, and you want to support startups, you want to support small, big enterprises, if you go fractional reserve, you can give out many more loans, you can provide much more capital,

the economy will run faster. The problem is that it's all fun and games until someone loses their life. So eventually, if we have seen now at a distance of 12, 13 years, we have seen again, we are again in the same situation. And I think we should start realizing that probably fractional reserve banking is not properly working as we intended or as we thought. And I think a stablecoin is a great way to protect the users or give them an optionality to still hold the value in the currency, but have access to full reserve. And that's, I think, what I like.

And our point of view is that we are now using extremely solid banks, But it's not that... You should never trust 100% bank. Yeah. Credit suites and Deutsche Bank are very reliable large banks. You just never know. That's sort of the black swat I'm talking about. I agree with you. I'm just saying

that's... If Goldman or JP Morgan or Wells Fargo disappears, it would be highly problematic go ahead the name of the game is trust no one right so keep everything in tdls you know and um tether has some investments also in um in precious metals that will be gold that you know you could argue that if there is a huge black swan, gold will go up immensely. And so in a way, you can still protect your customers. And we are doing that without, you know, and the more we grow, the more we can protect the customers.

That is all part of that. It's not that you never see, you know, our name on stadiums that cost like hundreds of millions of dollars and stuff like that. It doesn't matter. all that is marketing. It doesn't matter, it's not helpful to people in Turkey, in Venezuela, in Argentina. All our markets are there. And so they don't care that we are the most cool looking brand in the world. They just need to see, to know that their money is safe and they can use us right. I mean, I've often made the argument that the stable coin has been the killer app for crypto. People say there's no killer app, but to me, it's been stable coins. And what you just touched on is exactly the reason.

Bitcoiners love the idea that people in hyperinflating economies would rush to Bitcoin as their store of value. And I think we all wish that was true. But isn't the reality that people in those countries want access to dollars and they can't get it unless they go on the black market and take a massive haircut trying to buy it. So they're using stable coins as their replacement for access to dollars. I mean, to me, that's been the story of crypto that people don't tend to tell. Yeah, I agree with you. Look, I'm a, I'm a coin, right?

So I'm a, by, for, for some people, I also consider a Bitcoin maxi. But the reality of things is that, you know, in the emerging markets, developing countries, they don't have the time to speculate, right? So it's not for them, it's not trading. It's not. So of course, there is some speculation, there is some trading, but the majority of people have an urgent need and the urgent need is not getting killed by the local currencies, right?

They have the Turkish lira depreciating 80% against the dollar or the Argentine pesos and so on. So all these people, they need a stablecoin. They will go to USDT. And honestly, it just makes sense. But also, you name the black market, right? The black market you were used to get spreads of 150%, right? So you would need to pay 150 more to get dollars

you know stable coins and tether are you know that are available on standard um on ramps and off ramps in within the countries like argentina brazil and so on are completely killing the black market now you can access to usdt with like, you know, 3% spread, 6% spread. So that's a great story. That's how you actually help people to not get killed by these black markets and, you know, and all these crazy things. So, but yes, Tether is definitely the winner there. Bitcoin, I think,

is the next step, is the second stage. First, people need to protect themselves, protect their limbs, life savings. Then when they are more or less, when they are,

their families' wealth is saved, then they can look around and see if there is something better than stablecoins. In the end, Tether is centralized, right? So we'll never have that thing that Bitcoin has where whatever happens, Bitcoin is always there, right?

So Tether is centralized, but is a better, is a much faster way to access the dollar. And that is the immediate need that these populations have. On top of that, there is Bitcoin. That is something that they are looking into as well. But it requires more education, more effort to learn. I mean, it's the old adage, right? I mean, fiat is for spending and hard assets are for saving. And now we have a better hard asset.

But it's not a new thing that people would save their money in gold, but spend their fiat currency before it inflates. I mean, that idea doesn't change. But it's nice to hear you at least say that you support Bitcoin in that way and that that's your feeling on it. Obviously, we've discussed that many times. I want to talk about pegs because I think there's so much confusion in the market as to what the true peg is and what the peg is on an exchange, right? Obviously, there's been times when USDT

has traded above or below a dollar on an exchange. USDC was trading down to 85 cents a few weeks ago when the Silicon Valley Bank news broke. Were those actually DPEGs or is a DPEG only determined by redemptions directly from Tether or Circle? So this is a really great question, right? So in 2022, May, Tether traded for a brief moment below par on the secondary market, so on exchanges, traded below par, and then went back up almost immediately. What happened there, we talked three times, I was invited also in your show uh what happened there is that uh you know the um doing the band so the way to keep um the peg let's say let's go to peg on a secondary market on that on an exchange first

of all is not dependent by the issuer so tether cannot do much on a secondary market on an exchange right so those are market makers that can buy a cheap stable coin so we don't, on an exchange. So those are market makers that can buy a cheap stablecoin, so Vito Par, on an exchange, come to the issuer, redeem for $1, move the dollar back to the exchange, and so on and so forth until the spread goes back to zero and all is fine. And so that's what happened with Tether. Also, Tether had for a long time traded above the dollar. And, you know, when there is a lot of demand, would the Tether trade above the dollar on the secondary markets? So a market maker would buy Tether from the primary market, so from us, the issuer, and

sell it on the secondary market. And the sales pressure will bring back the Tether on the secondary market towards one. Is market dynamic is so simple is a question of forces. So there is pressure on the upward side. There are more issues. There is pressure on the downward side. There are more redemption is simple dynamic. So I think what happened recently with

USDC is the likely different because in that case, people thought USDC didn't have any more 3.3 billion. So I think people were pricing for a moment the fact that a circle could have lost that portion. And so again, market is simple. So market will always tend towards pricing the asset for the public information that people have. And I think it's fair. And I think the FDIC stepped in and I think that the FDIC said, we are going to clobber and hold the holes. And so the market is starting to redox. Yeah, that makes perfect sense.

Do you think that there was ever a risk for them that USDC could blow up, as people were saying? Listen, I'm not asking you to make a comment on a competitor. You just happen to have intimate knowledge of how this actually works. Let's say that the FDIC had not stepped in to backstop all of these banks. And we had seen question mark as to that 3.5 billion or whatever it was. I mean, to be clear that they still probably would have gotten 80 or 90% of that back. It just would have maybe taken a lot of time. But I think the bigger problem would have been that that would have triggered a further bank run to some degree. So do you think that

they were really like hanging on the edge of blowing up or do you think that it was largely people panicking well i think if the fdic wouldn't step in that would be extremely difficult for them to recover and i'm not saying it lightly and also i, I think that even for Tether, that would be extremely saddening. I spoke in the last few weeks, I spoke a few times about this, right? So if we think about the stablecoin industry as an industry, you don't want to have a single, you don't want to be the only company in the industry. It's not anymore an industry. There is only your company.

And so, you know, lawmakers don't make laws for a single company, for a single use case. They make laws for an industry. There is only your company. And so, you know, lawmakers don't make laws for a single company, for a single use case. They make laws for an industry. So we actually would be detrimental for Tether to be alone in the market. So we don't like that. We hope that our competition can, you know, improve their risk management, can diversify their banking. That is a big hit because also that affects the entire crypto industry. It's not just about stablecoins, right? So we don't think we should be the only game in town. We think that the industry has enormous potential.

There is a lot of things to discover. And so but I think that if the FDIC didn't step in, there would be big troubles. That said, so let's say for some reason a bank or someone like a competitor is in trouble, is there an upper limit to how much inflow Tether would be able to take at a given time? We always talk about the downside, but what if there was demand right now for you guys to have a trillion dollars or, you know, $120 billion, $500 billion all at once flowing in from somewhere else? Well, I think, you know, in the recent weeks, we grew more than 10 billion. Of course, it's not the numbers you are talking about, but our banking is extremely solid. I think in the recent weeks we grew more than 10 billion. Of course, it's not the numbers you are

talking about, but our banking is extremely solid. I think with public information that we started working with extremely important banks and primary brokers. So we are relentless and we are paranoid, right? So the way we approach things is that we don't like to wait for things to blow up in our faces. And we're always trying to find a better solution, a better, you know, a more safe approach to everything that we do, right? So we think that also tether can be perfection and and you know think you know the market is irrational and uh especially as you said at the beginning of this chart you know we are in the year of information and information goes really damn fast right so So you have always to think 10 moves ahead. And so I think that Tether can grow really widely if necessary and if the market has

a need for this move. What we are seeing really, and it's one of the reasons why Tether is growing a lot is that there is some concern in the US that crypto and stablecoins are not well seen in the US. This is the operation choke point 2.0 or whatever you want to call it. And this is a growing concern among many people in the industry outside of the US that were banking in the US. Right. So that is also making them think about Tether as a safer option. And so that's why we're seeing enormous influx as well. So it's important. I think it would be extremely saddening if it was discovered that in the end, the US was really and is against crypto

because it's a great technology, can be extremely helpful, has been proven to be helpful so many times. And I mean, the US is considered the country always at the forefront of innovation and not being part of the story of the crypto story, I think would be an enormous loss. I think it's already too late, to be honest. I hate to be a pessimist, but with everything that's happening and the speed of innovation in crypto, it's all happening offshore

and we're going to be so far behind in the United States, sadly. But I want to talk about, we obviously had the FTX explosion. They were a huge exchange. Obviously, there's all kinds of FUD around the other exchanges, the CFTC attacking Binance,

the SEC potentially attacking Coinbase. Is there any single sort of, if an exchange went down that could dramatically affect your business? I think we all understand how it would affect us as individuals. But if all of a sudden, all tether trading volume and demand

disappeared from Binance overnight, for example. We just keep... So our business model is simple. If for tomorrow, there is no need anymore for Tether, right? Imagine the worst case scenario, right? Tomorrow, everyone decides that they don't need Tether anymore because there is some something new cooler faster better uh that would work um you know perfectly with the you know magically even right let's let's say tether is not needed tomorrow

we will just give back the money so i wouldn't even feel threatened right so our role is not trying to have the closest grip to this money. We have to serve the industry. If there is a better, we are also part of the market people. If there is something better tomorrow, you know, Tether market cap will go slowly or fast down and it's fine, right? That's not that, you know, we have to be the biggest stable coin forever for like the next 1000 years that's not the whole point right so uh we think that technology will always improve and uh our our simple job is to be there to be helpful and uh you know also you know I bought that at the point at some point Bitcoin will be more and more adopted as the standard currency of the world.

But, you know, so far, I mean, I think that there is an Indian school and best extremely well prepared to risk management. I mean, you talked about the fact that you guys made $700 million in a quarter. I have to imagine that that's the benefit of Fed tightening in higher interest rates, basically, right? I mean, largely? Yeah, absolutely. Yeah.

It's not magic. We are around the 28th or 27th biggest country in holding T-bills in the world. I think we are between Australia and Mexico or above Mexico nowadays. I mean, it's, and of course, if the interest rates are going up, of course, we make more money. But you were still a successful business when we were effectively in a negative interest rate

or no interest rate economy as well. So how were you still making money and staying afloat at that point? We had issuances or redemptions fees. So we are the onlyloat at that point? We had issuances or redemption fees. So we are the only stable coin that have 10 basis points in issuances or redemption fees. And also the assets that we had were yielding between 5 and 20 basis points anyway. So the course is different from 4%. That's a huge difference.

But we are a lean operation and we were still profitable anyway. So I guess talking about black swans and worst case scenarios, we sort of mentioned what would have happened if the Fed didn't step in and backstop, which is, by the way, historic action, violating 100 years of central bank

sort of views and policies and unwinding tons of previous legislation and regulation. But what if the worst case happens and there's bank runs around the country and they can't backstop them and it goes worldwide and all of a sudden we have, you know, hundreds of millions or billions of people on the planet that don't have access to their money from banks? Well, I mean, non-financial advice, Tether and Bitcoin will go really high. And unfortunately, that could even happen to Tether. I mean, really.

Like where it's priced way above a dollar. Yeah, where it would be priced way above a dollar. Yeah. Yeah. I really don't want anyone to start speculating that Tether will go above the dollar. Absolutely not. But really, but in general, you know, the market dynamics are unpredictable. So if you hope it's, but definitely I think Bitcoin will go to $7 gazillion in that case.

Yeah. And we'll be living in like a Mad Max dystopian future where nobody wants to live if it goes that far. But yes, that makes a lot of sense. So, I mean, in that world, I mean, do you really think... I don't think it's going to happen. But I mean, just even if a little bit of that happens, do you think that we can really start to see actual mainstream adoption of Bitcoin? I mean, we've seen price go up as the bank stocks have gone down, as is bad news. But I think it's kind of clear that's really crypto people moving into Bitcoin and not

probably grandma and grandpa, right, in middle America. So do you think that any of this, what's happening, has raised awareness for Bitcoin and could get the mainstream to really start viewing it as that safe haven asset. Look, I mean, in the future you're describing, keep in mind that if that happens, Bitcoin will really go high in crimes because that's the only thing that will guarantee that you will keep your own money for yourself. And I think it's exactly so. I think Bitcoin, if I have to describe it, is the money for the worst case scenario, right? It's the money for the worst case scenario.

Until things are perfect, and they are today far from being perfect, especially when we think about our condition, there are many other countries that are in much different conditions than ourselves, of course. But if these conditions, if the unrest and the financial issues will start propagating widely around the world, I think the geopolitical situation is that the military will completely crumble. And the only direction it will be turns out. Is there a situation where the T-bills that are the safest risk-off asset in the world that you guys are invested in also blow up? Because that would be the end game for Tether, but also for the world. Well, Tether has to do exactly what the dollar does, right? Remember,

it's not that you have to beat the dollar. We have to respect the dollar. Right. So if the dollar exploded, all bets are off and yeah, you're moving back to... Is that when we get Bitcoin back stable? Yeah. I mean, we have Tether Gold, right? So we have XLT and it's 100% bought by real gold bucks. I mean, that's the thing about Tether. We always think about the worst case scenarios and we want to give up this to people like us that always want to hedge themselves. It was interesting going back to the point about people in countries with hyperinflation. I was listening to CZ speak in Dubai about a month or two ago, and he actually pointed out that at least half, I think he said, of Binance accounts are not people who are trading.

They're literally using Binance as a wallet to effectively use stable coins we have to you know also i had you know most of the time i had my bitcoin uh hat but there is an so i'm the first one that pushed for self-custody but we cannot pretend that every single person in this world is as educated as the people living and breathing crypto. So there are a lot of people that, you know, in the world, there are a few billion people that are unbanked. And since they are unbanked, they are most of the time that are not even super familiar with the latest technological innovations. So pretending that everyone from the get-go start castling their own assets with their own private keys, of course, would be perfect, would be amazing. I would love that work. But it cannot happen from one day to another. And until then, it's normal that people that hear

about stablecoins, they hear about Bitcoin, they will use a centralized service that will require any email, a password, and that's it. It's normal. We have to be intelligent about our expectations and about the growth that this technology can have. And it's also our job to try to make the life easier of whom wants to custody their own assets to do it safely without having the risk of losing them. So it's all about the user experience and us as a technology builder should be doing a better job because now we are not doing a great job either. Is there anything left that the regulator or legislators or any of these countries can do that you think could fundamentally affect you? I mean, do you think that the United States could attempt to completely ban Tether or something like that?

I mean, of course, everyone can do whatever they want. We are not servicing US customers. And also, I believe that one important note, as I was saying, believe it or not, well, I mean, the facts are on our side. We are helping the hyper-dollarization of the world. We are reaching all the countries that the US dollar is having trouble to reach because the banking infrastructure is too slow and is too old. And so I think on the other side the us is actually looking with good eyes better rather than being afraid i guess then the last question

speaking of centralized authorities would a central bank digital currency be a threat to tether um again i don't think so first of all, I've been talking with a lot of people in parts of different central banks around the world. And every central banker wants to say that they are having a pilot. So every central bank has a pilot for CBDCs. But they are scared. So on our side as CBDCs, we are scared because we think that it will become a dystopian world. But on their side, they are scared because the moment you put out and you start placing cash with a CBC, you cannot take it back, right? It's not like you can go and say, well, I was wrong, sorry, take back your cash. It doesn't work like that. So the problem is that you cannot predict easily all the consequences

from the big banks, small banks, all the citizens, all the business people that will start using this system. So actually it could be an enormous threat to the country's stability using this system. So actually could be an enormous threat to the country stability using the CDC. So that's what I hear, right? So it's not that they they really want to speak to to look cool. And they want to show that they are actually researching this stuff. But is the huge jump that in actually is really, really, really. And there are some countries, small countries, they don't have anything to lose. They have a quick initial currency and so they will do it. But Europe and US and or Japan, it's much easier.

I agree. I agree. I don't see it happening. And I guarantee if it happens within one year, it will be a major hack of one of them. I mean, we've seen it in crypto right a billion times but there's an incentive and smart people are going to find a way so you take all your money digital wait till one day somebody issues a couple extra trillion dollars and start air dropping them in everyone's walls or they'll be a Mr robot yeah I mean I just got to say I I just love seeing you guys continually just come out on top no matter what happens.

It's a great spectator sport, I think, for anybody in the crypto space because we've seen so many collapses and you guys just keep winning. It's really awesome, man. So thank you for everything that you do. Where can everybody follow you after this conversation? On Twitter at PaoloArduino or or better at tether underscore ko thank you always a pleasure awesome