Tether has invested US$20 million in Argentine digital bank Ualá, thereby deepening its commitment across Latin America as the issuer of the world’s largest stablecoin expands its presence beyond digital assets. The investment constitutes a segment of Ualá’s US$197-million funding round disclosed in March, which the company intends to utilise for growth acceleration and the expansion of its financial ecosystem within its current markets of Argentina, Mexico, and Colombia. Regulatory challenges in these nations hinder Ualá’s ability to incorporate Tether’s USDT stablecoin into its platform in the near future, stated Founder and Chief Executive Officer Pierpaolo Barbieri. “We always want to stay at the forefront of new products, but today we are a bank in all of our markets, and given the regulatory environment in Argentina and Mexico, there won’t be any type of stablecoin integration,” Barbieri said in an interview. “Tether is joining solely as a financial investor.”
Tether, with US$184 billion of tokens in circulation, has engaged in a series of investments in the region over the past months. In April, the company spearheaded a Series A funding round for the Argentine cryptocurrency platform Belo, and earlier this month, it disclosed an investment of US$18 million in the Brazilian cryptocurrency exchange Mercado Bitcoin. In addition to its activities in the cryptocurrency space, Tether made significant strides last year by acquiring a controlling interest in the South American agricultural firm Adecoagro. This move is part of a broader trend of strategic investments that encompass a diverse array of sectors, including brain-implant technology and sports. Tether joins Ualá’s impressive lineup of investors, which features Allianz X, the leader of the company’s previous funding round, alongside notable firms including Stone Ridge Holdings Group, Tencent Holdings Ltd., Soros Fund Management LLC, Table Holdings LP, and D1 Capital Partners. The March financing assigned a valuation of US$3.2 billion to Ualá.
“Ualá’s growth reflects the enormous demand across the region for financial services that are more accessible, efficient, and designed around the needs of consumers,” Tether Chief Executive Officer Paolo Ardoino said in a statement. Ualá’s 11 million customers are predominantly situated in Argentina, where both banks and fintechs are facing challenges due to increasing delinquencies. This situation follows a period of swift credit expansion last year, which has been compounded by escalating interest rates in the lead-up to midterm elections. Private-sector lenders have subsequently reduced their credit growth in response to the decline in household loan quality. Barbieri indicated that Ualá’s delinquency rates have decreased over the past seven months, and he anticipates that its operations in Argentina will achieve break-even in “the next one or two months” as credit quality enhances. That will enable the company to allocate a greater portion of its capital towards international expansion.
Founded in 2017, Ualá’s expansion efforts are increasingly focused on Mexico, where the company identifies substantial opportunities to capture market share, even amid growing competition from banks and fintechs. Mexico continues to rank among the least-digitized payments markets worldwide, with cash accounting for approximately 85 percent of small transactions. “Mexico is an extremely young market compared to Brazil, a regional pioneer, and Argentina, which has undergone significant digitization in recent years,” said Barbieri. “There is competition in Mexico, certainly, but the total addressable market is infinite.” Barbieri recognised that the company is adopting a prudent stance regarding lending in Mexico, while simultaneously concentrating on the introduction of new products, including a recent initiative that facilitates investments in US stocks and ETFs. He refrained from providing an estimate regarding when the firm will achieve break-even in the second-largest economy of Latin America.