Investors find valuations too expensive! Tether's fundraising target cut from $20 billion to $5 billion, even the top stablecoin "backs down"?

The global largest stablecoin issuer Tether's $500 billion valuation target has encountered resistance from investors, leading to a significant reduction in its fundraising expectations. Tether originally planned to raise between $15 billion and $20 billion, but advisors are now considering lowering the fundraising amount to a minimum of $5 billion, highlighting market skepticism about its sky-high valuation.

According to a report by the Financial Times on Wednesday, Tether CEO Paolo Ardoino downplayed the fundraising scale in an interview, stating that the initial target of $15 billion to $20 billion was a "misunderstanding." He stated, "This number is not our target, but rather the maximum amount we are prepared to sell. If we don't sell a single share, we would be very happy." This statement sharply contrasts with the ambitious fundraising plan the company 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 made a profit of about $10 billion last year, profits are expected to decline by 23% year-on-year in 2025, putting its profitability under pressure.

The cryptocurrency market has significantly declined over the past six months, with traders fleeing speculative assets, further weakening investor interest in overvalued crypto projects.

Valuation Dispute as the Biggest Barrier to Fundraising

According to insiders, Tether's advisors have faced significant resistance after engaging with potential investors. The $500 billion valuation target has raised widespread skepticism, with investors privately expressing concerns about this pricing.

Paolo Ardoino defended the high valuation by comparing Tether to loss-making AI companies. "AI companies have profits as much as ours, just with a negative sign in front," he said, "If you believe that an AI company is worth $800 billion, and it has a huge negative sign in front, then that's up to you."

Tether claims to have made a profit of about $10 billion last year, mainly from the returns on asset reserves that support the value of USDT. The company has a $185 billion market cap for the dollar-pegged stablecoin USDT, which serves as a reserve currency in the digital asset market. However, profits are expected to decline by about a quarter in 2025, which Ardoino attributes to the drop in Bitcoin prices.

Insiders warn that negotiations are still ongoing, and the fundraising terms may change. If the broader cryptocurrency market begins to rebound, investor sentiment may shift.

Regulatory Risks Make Investors Hesitant

According to insiders, some potential investors are concerned about the regulatory risks facing Tether. Since its establishment in 2014, the crypto group has been scrutinized due to concerns about the use of the token for illegal activities, as well as issues regarding the transparency and quality of 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 stated that the company has shown potential investors "in-depth" tools to cooperate with various law enforcement agencies S&P Global Ratings downgraded Tether's reserve rating to the weakest level at the end of last year, citing increasing exposure to high-risk assets such as Bitcoin and gold. At that time, Ardoino responded, "We proudly accept your disdain."

The new U.S. stablecoin legislation signed by Trump, along with the public offering by U.S. competitor Circle last year, has provided momentum for Tether. Tether recently launched a new token in the U.S. that complies with regulatory requirements. However, regulatory uncertainty remains a major concern for investors.

Profitability Under Pressure

Tether's profit structure is highly dependent on the performance of the crypto market and investments in reserve assets. Profits are expected to decline by 23% year-on-year to $10 billion in 2025, reflecting the direct impact of the downturn in the crypto market.

Ardoino revealed that the company gained approximately $8 billion to $10 billion from its gold holdings, benefiting from rising precious metal prices. USDT has accelerated its growth since 2020, making Tether one of the largest buyers of U.S. Treasury bonds globally and a heavyweight participant in the gold market in recent months.

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

Tether's efforts to attract well-known investors are seen as a barometer of interest in the cryptocurrency industry. This move is viewed as an attempt to solidify Tether's credibility and network, despite the company being highly profitable and requiring little additional capital. Digital assets received a boost after Trump's election due to promises of a more favorable regulatory environment in the U.S., but the market has significantly declined over the past six months