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Tether plans physical headquarters in El Salvador

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CEO, co-founders plan to live in the country

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El Salvador seeking to become a hub for digital currency

trading

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Regulators concerned about booming stablecoin market

By Federico Maccioni

DUBAI, Jan 13 (Reuters) - Cryptocurrency firm Tether

plans to move its headquarters to El Salvador, its chief

executive said, as the founders of the world's biggest

stablecoin look to capitalize on the Central American country's

bid to become a hub for crypto trading.

Tether has emerged as a dominant force in the booming market for

stablecoins, which are designed to maintain a constant value by

being pegged to traditional currencies and offer users a way to

move money between cryptocurrencies without exposure to price

swings.

CEO Paolo Ardoino told Reuters that Tether would relocate to

El Salvador after the cryptocurrency recently obtained a license

there as a digital asset service provider. Ardoino and his

fellow managers and cofounders of Tether will also move their

residences to El Salvador, he said. Previously, the company was

incorporated in the British Virgin Islands.

"This move to El Salvador will be the first time we're going

to have also a physical headquarters," he said. But not all of

the company's 100-plus employees will move there, he said,

adding that many of the staff work remotely.

The company plans to hire 100 Salvadorans over the next

several years, he said.

The booming market for stablecoins has worried regulators

concerned that growing stablecoin reserves expose the broader

financial system to bigger risks, because they act as a bridge

between the crypto universe and mainstream financial markets.

Tether has faced questions around its reserves and does not

fully disclose where they are held or in what form. The firm

says the vast majority of its stablecoin is backed by

traditional currency reserves held with Wall Street brokerage

Cantor Fitzgerald, whose CEO, Howard Lutnick, has been nominated

to head the U.S. Commerce Department under President-elect

Donald Trump.

"So we have some liquidity on other banks, but the vast,

vast majority of the T-Bills are in Cantor," Ardoino said.

BOOSTING MONITORING OF TOKENS

The company said last year it was increasing monitoring of how

its tokens are used to combat illicit finance.

Asked whether Tether had considered alternative locations

for its headquarters, Ardoino said it lacked a license to

operate in the European Union and had ruled out the United

States for now. It was "quite premature" to predict possible

changes that might be implemented under Trump, he said.

Trump's victory in the November U.S. election sparked a record

rise in cryptocurrency prices. The Republican has vowed to

introduce a friendlier regulatory environment for crypto and

said he planned to create a U.S. bitcoin strategic reserve.

El Salvador is seeking to become a hub for digital currency

trading, and three years ago President Nayib Bukele made it the

first country to establish bitcoin as legal tender, alongside

the dollar.

"Welcome home," Bukele wrote on social media platform X in

response to Tether's announcement. In a separate post on Monday,

Bukele asked the CEO of Rumble, Chris Pavlovski, to

consider moving the headquarters of the video-sharing platform

to El Salvador. Days earlier, the company announced a cloud

services agreement with Bukele's government.

Tether's eponymous dollar-pegged token (USDT)

accounts for roughly two-thirds of the $212 billion worth of

stablecoins in circulation, according to CoinGecko data.

The overall market has grown around 45% over the last year,

the data shows.