Let's

talk about then the reserve breakdown a little bit. So I think we've talked pretty much about cash and cash equivalents and, you know, that's basically overnight reserve repos, treasury bills, 76% treasury bills of that 84%, it looks like, or no, not of the 84%, 76% of the entire USDT treasury is T-bills there. So I think we've kind of covered

the cash. Is it a bit more? Just to say, because you have to count the overnight reverse repos that are secured by T-bills. And then you have to count the money market funds that are invested in T-bills. So the total amount of T-bills that we have now is, I could get the decimals wrong, but it's around $80.4 billion that would put a tether just after Germany in how many T-bills we hold. I want people to hear that. Just after

Germany, the country. We're not talking about a bank in Germany. We're talking about the amount that the Central Bank of Germany actually owns. And you have more T-bills than the Central Bank of Germany? Is that what you're saying, Paolo? Just after. Just after.

But we have more T-bills than UAE and many other countries like Australia and so

on. Are you top 10, top 15, something like this? We are 20th. 20th. The 20th largest holder of T-bills then. And, you know, among central banks, I guess, like as well, those would be the top, the other 19. Yeah.

Look, there is an interesting innovation that, you know, people think about USDT as the, you know, around the digital dollar. Sure. But also the other important innovation, the other two innovations that we made were one, the over collateralization. As I said, banks are used to lend out and they have only to keep 10% of their assets liquid. right? So that's the big difference. So we have 105% of assets in the company. And the third big innovation is actually how much United States really cares about the dollar, right?

And

the hegemony, the distribution of the dollar and the dollar as their server currency of the world has always been one of the fundamental pushes that the United States made in the last 100 years to make sure to remain dominant in many different markets. But that happened in many different ways before, through cash, sending cash abroad and so on, through the euro dollar, called the euro dollar, and the petro dollar before and so on. But all those had a missing piece. If you have cash running around in Argentina, that cash is pure cash. The difference with USDT is that if you have for any Argentinian or Turkish person that holds USDT, Tether is buying a portion of the US debt. So that is the crazy new innovation that happened. Before, you had only the cash out, but that cash was just circulating. That was not going back to benefit necessarily and directly the US economy. And in a year like 2023, when the US government printed $2 trillion, then you have China that in the last four years, China reduced their UST bills by a big percentage where I think four years ago, they had $2 trillion in US T-bills, and now China has $800 billion. So it means that Tether holds 10% of the T-bills that China holds. So you see that we are actually, if you think about it, USDTA is a good ally for the United States for the very same reason that it's actually helping to repurchase and spread this process throughout hundreds of millions of people. And that is something that I think not many people are thinking about. And when we think about modern monetary policies, I think stablecoins like USDT are actually a key part when you think about your internal country debt. Yeah,

I kind of wonder how that argument is landing. Basically, you're saying when other countries use sort of cash, right? When I'm talking like physical, you know, $100 bills or something like that, that is not the same as actually buying treasuries. And that's really what Tether is doing. So Tether has been a net purchaser of $80 billion of US treasuries at a time when the US kind of needs to sell its treasuries worldwide in order to kind of like fund all of its debts. And so you're saying, basically, you're not saying this to the US government necessarily, but you're saying this to, I guess, generally the American people, I would say, is this is a good thing for US dollar hegemony, right? US dollar power worldwide, because now you have a decrease in demand in countries like China, and certainly other countries worldwide. And now here's this new way to export your debt to the world. And don't you need that? Don't you need net new buyers of debt? And yet I wonder, Paulo, as well, on the flip side of this, right? Are you worried about becoming too big? And what I mean is, right, at 100 billion in US treasuries, let's call it, you are like bigger than Germany, right? I mean, these are major geopolitical entities, let's say, and people start to take notice. I mean, there was talk even this week in Congress about Tether. We could talk maybe a little bit about this in the conversation that happened about Tether. But like, Tether is definitely under the microscope, I would say, at least in some quarters in the US. And if you got as large as $1 trillion, wow, I mean, I don't know how large you would be in kind of the scheme of things if you think Tether can even grow that large, possibly, but you're sort of a geopolitical entity at that time. And you have other problems, let's say, or regulators and officials in the US government kind of takes notice. How do you think about that? Do you worry about getting too big? Or is that a sign of your success? And you just think you'll be kind of ushered into the traditional financial system, maybe through a kind of like a backdoor and maybe the hard way, not through the existing institutions, but they'll have to kind of accept Tether. What are your thoughts on this? Well, that's

a really good point. Again, although many years pass from the creation of Tether UST, I think we can argue that the growth has been extremely rapid. So it's hard to judge what is going to be the next two, 30 years growth of USDT. First of all, we are not selling, we are not allowing US people on the platform. So first of all, the market cap, if you think about it is coming from non-US countries, so the rest of the world. And so that is one of the things that should make it more exciting for the US. So it's not like we are getting or incorporating US money to buy the US debt. It's actually outside other countries' money. So the growth in a way, and it's kind of in a way sad, is that the success of Tether is the insuccess of global finance and the insuccess of financial policies in many emerging markets. The more a country has problems from the financial point of view, the more its people are going to use USDT. And that is kind of the sad part, if I admit, right? Because no one wants to try when things are not going well. But I mean, I doubted that many people are thinking today that the world is going in a great direction, right? So you can see more wars, more issues. And so in a way, the growth of USDT is a symptom of something really big that is not working, that is falling apart. So how big can it become? I think USDT can become really big. I think that it's really important for Tether to realize that, as we did realize that, and partner with the biggest institutions in the market to make sure that the product remains safe. We have been working and collaborating with law enforcement agencies around the world. We have onboarded the United Secret Service, the FBI. We are collaborating with the DOJ. We are collaborating with the National Bureau of Counterterrorism in Israel. So we realized the importance and the fact that Tether is kind of the backbone of the last mile of international finance, right? So I think that as many new industries, the growth can be incredible. You know, when throughout humanity you have many times these type of companies that grow really rapidly. And I think our role is just to work with regulators, work with policymakers, work with central banks to showcase what we're doing and to make them comfortable in what we're doing. And there is always time to learn. And we believe that although with the recent events, and you know, again, what we achieve with our investment in TBI, the fact that we are keeping the vast majority of the profits within the company is also another important attestation from our side in how much we want this product to be as safe as possible. So any other company, you have $5.2 billion of profits or excess equity, that these are undistributed profits. I put back that almost any Silicon Valley VC would have gratefully split those dividends and start enjoying them. But we are keeping the majority of them within the company because we want to show, we want to advertise the world how strong and how solid we want to be and we are and how much we believe in the safety of our product. So it sounds like the strategy is basically

to continue to work with US government and regulators as they're open to working with you and basically get their blessing. And you say you are already working with them. I saw this earlier this week, I believe it was VP of policy from Circle, which is the creators of USDC, which I think, Paolo, you mentioned is one of the Tether competitors. They of course have a different stable coin. Said something in Congress earlier this week that caught my attention. I personally believe no company should be allowed to reference the US dollar without having democratic inside their USD backed stable coin was the statement. I think castigating Tether a little bit here. And like, I'm wondering what you make of this sort of thing. I know you've mentioned earlier in our conversation, you feel like the goalposts have moved and it used to be people saying Tether is not fully collateralized. Now there seem to be saying that Tether is not compliant with kind of like financial surveillance types of apparatus. I'm actually not sure what the specific concern or charge is here. Although JP Morgan, you know, a bank in the US, I know recently said something, one of their analysts said, we view the increasing concentration in Tether over the past year as a negative for the stablecoin universe and the crypto ecosystem more broadly. I believe, Paulo, you fired back at them. And you said it's a bit hypocritical to talk about concentration coming from JP Morgan, the biggest bank in the world. What do you make of all of this kind of conversation? Is it sort of Tether against the establishment bankers? And are you seeing like circle kind of like team up with the regulators and try to push you out? Like what's your take on this market and what's going on right now?

Well, first of all, I'm, I think that was evident to everyone. If you read Twitter comments on that event in Congress, you know, people were really sad to see a company in our industry spreading lies about another company in the same industry, right? So the reality is that as Tether announced, we respect the OFAC as the analyst. We onboarded the FBI. We onboarded the United Secret Services. We worked with the DOJ. So we worked with 31 different law enforcement agencies around the world. I mean, market has spoken, right? So I understand that our competitors might be upset because they are probably scratching their head and don't understand why people prefer us. So they consider themselves more beautiful than us. But the problem I think you touch base at the beginning of this call is that, I'm paraphrasing, but when you build a business, you have to think about who your users are. Building a business where your target is the institutions, the institutions have already the best banking rails, the best cash rails and everything. They don't need a stable coin. People in emerging markets, developing countries need a stable coin. So, you know, I feel like, I'm sorry, because I feel that this is an act of desperation. And, you know, it's lying in front of the Congress saying, well, we are not complying with the regulations on this lie. I mean, we collaborate on more than 300 cases with the DOJ in last years. I mean, I think that's the number, give or take. And we are faster than anyone else in replying to law enforcement requests. I mean, we froze much more than our competitors due to working with law enforcement. So I don't know, I feel just sorry. I mean, sometimes if you are the it's normal that your competitors are stabbing you, right? So everyone wants to be in front. I don't know what to tell you. And JP Morgan, for sure, they're probably upset and missed on Bitcoin and stablecoin train. And now they are trying to make up to their losses. Or maybe it's just a random financial analyst. I really, in mind of my own business, I think that we proved that we made the right decisions in growing the company, growing the customer base. It's not us that left $3 billion in the bank uninsured. I mean, you know, if, sure,

if you want to try

about it, I mean, it's, but it's not our fault. People should look at their own houses.

I think this is a good time to remind folks too, Paulo, that Tether does, as well as USDC, have the ability and other stable coins that are centrally issued, have the ability to actually freeze accounts. So how does that work? So you said you're compliant with OFAC, the SDN list, that kind of thing. If a name or an address, let's say an Ethereum address gets published to this list, then what powers does Tether actually have? Can you just stop the transfer of funds? And how does that work kind of mechanically? So government agency publishes a list and then basically by law, you have to just freeze the account. And so whomever has that account can no longer move their USDT. Is that how it works? In

short, yes. And because I also am a big fan of clarity and education, stable coins are centralized. 99% of the market is made by centralized stable coins. This means that, sure, stable coins are using blockchains, but blockchains are purely transport layers for stablecoins. The entire power remains in the hands of the issuer. So the issuer is the one that has the access to the multi-sig controls that allows the issuer to issue, redeem, burn, and also freeze and unfreeze specific wallet addresses. So if law enforcement contact tether, we do our due diligence. We review the claim of the law enforcement agency. We validate the chain of events. And if that is confirmed, that we proceed to freeze the funds. The vast majority of the funds we froze was, you know, maybe you remember some the cases, but they were due to exchanges getting hacked, DeFi getting hacked, you know, people losing money. And I'm proud to say that we return really more, I think hundreds of millions of dollars to legitimate owners.

Because you can freeze it. Yes. Like, and then what do you just reissue to the rightful owner in that type of a case, a case of a hack, let's say? So we freeze, then

we burn the assets on the frozen address and we reissue them to the legitimate owner. So we have done this multiple times also for notable exchanges that were hacked or notable DeFi protocols that

were hacked. why you think Tether has been so successful. So we mentioned earlier that Tether has about 70%, maybe more than that of the stablecoin market. What does it take to win stablecoins? I mean, there's been many, many competitors over the years. I remember Gemini's GUSD when I thought that could kind of like take off. It just really has gone nowhere. Like PayPal has a new stablecoin. It's still pretty early, I would say, but just hasn't received nearly the traction that Tether has. Pax, there's been so many different attempts at stablecoins. What do you make of why Tether has been so successful where others haven't? What's kind of the secret here? Again,

I think the main issue is that you have to understand who needs your product. That is true for any product. If you build an app for a smartphone app, you need to understand who needs your product, right? You shouldn't force the product down the throat of people. You have to find the sector that is in need of your product. And so our competitors, every one of our competitors focused on, they had basically two different strategies. One strategy is, oh, let's work with banks and hedge funds and have them using their stablecoin. So our competitors basically wanted to be the replacement of the settlement layer across financial institutions. But again, these financial institutions have already the best banking. They work on credit, their wires, their ability to transact among each other is so fast. It's like trying to sell ice cream to an extreme eat. It doesn't make any sense. So Tether always focused on emerging markets in developing countries. So the people that cannot have a bank account. And you find them outside of Europe and outside the US. And there are countless people that I still today have talked to, they don't understand this simple concept. They are living nicely in Europe or they are living nicely in the US and they think the entire world is exactly as their home. But if you try to go to El Salvador, if you go to the, you know, poor countries, the situation is completely different. People are actually, they need to be smarter in order to find solutions to be able to survive. And that's how it is. And so that's our realization that the world is in need of the last mile is the most important part is good part of our the fact that we have the biggest market cap. And second is also now I'm seeing many stable coins that are interested, they think that they can grow really fast, promising sharing the interest from the investment, right? So the T-bills and whatever they have as collateral.

Yeah, let's talk about that. That's been a big theme, like the idea of tokenizing T-bills. And that would, you know, some of the profits, the billions in profits, maybe those could be passed on to the USDT holders in some way. I don't know if that's a concept, but yeah, talk about that, Paolo.

Yeah. Look, the issue there is that, first of all, if you start sharing an interest, you will likely make it a financial instrument for security in many, many jurisdictions. So first of all, I think we don't want to take that risk. And I know that some of our biggest competitors behind the scenes are doing that, but it's not for us. We were happy when the interest rates on TBOs were like 20 basis points. We are happy today, so there is no need to take on such a big risk. I think it's a double-edged sword that could kill our competition. Second, think about this. Again, going back to the first point I made, do you think that for a person that lives in Argentina or a person that lives in Turkey, where the intraday volatility of their national currency compared to the dollar is more than 4% on average, they do care to have 4% more at the end of the year? So in business, you have to understand who you're talking to. And the most important thing for these communities in Turkey and Argentina is that they are using a safe product. That is the most important fact. They are not complaining for a few percentage of yield because the savings that they're making, not keeping their money in international currency, is quite high. So it feels to me that the people designing these stablecoins that are providing the yield are again designing a product for people that have already the ability of using other products like banking system.

Yeah, I get that. And by the way, I don't think we maybe clarified how Tether makes its money, right? And you mentioned $6 billion last year at a billion per quarter. It's on that delta, right? Is it mainly on treasuries, for instance? So you have treasuries in your reserves, and those are yielding 5%. Maybe I'm oversimplifying things, Paolo, but they're yielding 5%. And then you're just able to kind of keep that 5%. And that's how the business model works. Now, if the Fed funds rate decreased to like 1%, then it kind of cuts into your profit, obviously. But is that the primary source of revenue for Tether itself?

Yes. So that is, I would say, the vast majority of the profits. And then there is a bit of appreciation on the Bitcoin holdings and the gold holdings that we had. But the vast majority is US TBLs that are now yielding around 5.5%. And we use short-mortorty TBLs that are around 90 days now.

Well, you're talking about your competitors not really understanding sort of the merging markets and that kind of thing. One thing that's been pretty astounding to me, and I think to a lot of people in crypto, is the success Tether has had on Tron. So there's actually more Tether on Tron right now than there is Ethereum, according to kind of at least the December transparency reports. I mean, it's pretty close. It's neck and neck anyway, about, you know, 51 billion or so on Tron. What's your take on why? Why has that been so successful? And this is kind of like painted by, as of this morning, the time of recording, USDC has actually decided, Circle has decided to discontinue their stablecoin on Tron. Effective immediately, the tweet says, we'll no longer mint USDC on Tron. What do you make of that? And what do you make of the success Tether has had on Tron so far? Why is that happening?

Well, first of all, I think our competitor has only 300 million in their stablecoin on Tron. So probably it's not a thing for them, right? There is not much sense. Also, Tether discontinued different chains in the past that didn't yield much volume. But let me tell you, so Tron or Ethereum or Solana or Stablecoin insurer are just transport layers. The power, so we have the ability to monitor the chain analysis and other tools, Tron, Ethereum, and others. So, we have the ability of freezing wallets on Tron, Ethereum, and others, and so on. So, all the controls are equal to the different chains. So, if someone is using a chain or the other, doesn't matter too much. The importance is exactly that we have the ability of being compliant and ensuring our compliance requirements across the different transport layers. Now, there is an interesting fact. People think, oh, well, you know, that are issues on Tron. Well, and because, you know, sometimes people prefer Ethereum, right? There is, you know, in the blockchain industry, there are religion wars. And when you support multiple chains, you have to be careful with religion wars, right? Because it's not, everyone can decide which chain they prefer. The reality, the reason why Tron became so popular is that for so many years, sending transactions on Ethereum was expensive. So if I'm not wrong, the first meaningful rollup on Ethereum was born in 2022. And also 2022 was the year of everything blowing up in the crypto industry. So not many people had the time of transitioning from Tron to something else. And so 2023 is the first year when things started to be quieter and things started to get better. So it's basically like Tron had five years before Ethereum realized the importance of releasing something that would make transaction fees bearable. So it cost five cents of a dollar to send a transaction on Tron and costs $5 to send a transaction on Ethereum. And so if you give, you know, thinking about putting myself in the shoes of Ethereum, if you give your five years first mover advantage to your competition, then you are talking about hundreds of thousands of people. well, actually millions and millions of people, but hundreds of thousands of service providers, they build their rails around Tron because it's cheaper. Again, we shouldn't be obnoxious people thinking, oh, well, but, you know, because if you live, again, in Europe and the US, again, I'm European, so I'm allowed to say that, you think that, you know, yeah, why people should use Ethereum is more decentralized. Well, you never put yourself in the shoes of a person that where $1 in transaction fees are a lot, even $0.50 are a lot. So if you have to choose between paying $5 for a transaction fee, that makes the entire difference if the USDT is your checking account. And look, in the end, the reality is that the only thing that matters is the issuer. Because the issuer has the control. We could freeze or post a smart contract on each chain. So we have these abilities. So one transport area or another, as I said, we have all the compliance tools to remain compliant as an issuer. So it's just a matter of transaction fees and speed of transaction.