*

Tether looking to boost use of its stablecoin in

commodities

trading

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'Tokenization' of agricultural commodities like sugar or

corn a

potential option

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Company to use biomass-generated electricity to power

bitcoin

mining

By Marcelo Teixeira

NEW YORK, July 16 (Reuters) - Crypto powerhouse Tether,

the world's largest digital assets company, is leveraging its

recent acquisition of a South American agricultural firm to make

a strategic play for the multi-trillion dollar a year global

commodities trade.

The company aims to embed its stablecoin, a digital currency

pegged to the U.S. dollar that trades in crypto exchanges, into

the core of markets where raw materials are bought and sold,

promising to slash cross-border payment costs and times from

days to seconds.

New York-listed Adecoagro ( AGRO ), a company that produces

dairy in Argentina, rice in Uruguay and sugar and ethanol in

Brazil, among other products, agreed in April to sell 70% of its

shares to Tether in a deal valued at around $600 million.

It is another sign that the quickly-expanding crypto

industry is moving into brick-and-mortar businesses, and

broadening investments in physical assets.

"The crypto industry is increasingly focused on bridging

digital finance with tangible assets," said Joe Sticco, chief

executive of Cryptex Finance, a company that created indexes

that mirror cryptocurrencies' market caps.

He said that by adding income-generating assets like

farmland or food processing plants, Tether could strengthen its

balance sheet and provide a hedge against inflation.

Tether's main business segment is USDT, a digital currency

backed mostly by U.S. Treasuries. Launched in 2014, USDT has

grown sharply in trading volumes amid rising interest in

cryptocurrency and token prices.

It is a way to make payments outside of the traditional

global financial system. The big difference between USDT and

bitcoin or another cryptocurrency like ethereum is that USDT is

designed to track the U.S. dollar, the currency dominating

global trade.

COMMODITIES TRADING

Tether has issued $143 billion in USDT so far, and it said

in its first quarter report that it has $149 billion in

reserves, including $120 billion in U.S. Treasuries.

"Tether wants to boost the use of its stablecoin to make

cross-border payments, something that I think will grow a lot in

financial markets, particularly in commodities markets," said

Marcos Viriato, the chief executive of Parfin, a South American

company providing technology for transactions with

cryptocurrencies.

"If a company in Brazil sells commodities to someone in

Bolivia, the payment through conventional channels could take

more than three days. With USDT it would take seconds," he said,

adding that operation costs would also be much lower.

Parfin has a pilot project with Brazil's third largest bank,

Banco Bradesco ( BBD ), where Brazilian commodities exporters

sell products to clients abroad who pay with stablecoins.

Bradesco then uses Parfin's infrastructure to convert those USDT

to local currency, which is deposited in exporters' accounts.

"Tether's investment approach prioritizes companies that expand

our distribution network and enhance the real-world utility of

stablecoins, with Adecoagro ( AGRO ) as a prime example," Tether said in

response to a Reuters request for information on the deal.

The company said it is evaluating, alongside Adecoagro's ( AGRO )

management and other industry experts, how stablecoins could

enhance efficiency and liquidity in commodity trading.

Tether reported late last year that it had financed a

physical crude deal between a major oil company and a

commodities trader, which was settled using USDTs, the first

time a deal on these terms was done.

Reuters reported earlier this year that Russia was using

cryptocurrencies in its oil trade with China and India to skirt

Western sanctions. Venezuela has also sought to use digital

currencies to trade.

SUGAR TOKEN

Another possible option for Tether as it enters the

agriculture world is the so-called tokenization of commodities,

said Gracy Chen, chief executive of crypto exchange Bitget.

Tether already has a gold token, which mirrors gold's value

and is backed by gold reserves. It could look now into a sugar

or corn token, that could be used for hedging or as a collateral

in pre-harvest financing, Chen said.

"In effect, they are turning farmland, sugar mills and

renewable energy plants into programmable financial

instruments," she said.

Tether said that it sees "significant potential in exploring the

tokenization of real-world assets, including agricultural

commodities," although it stressed that there were no immediate

plans to launch a sugar or corn token.

Instead, for now, the crypto company will use its

acquisition for a different application. Tether said it will tap

renewable energy produced by Adecoagro ( AGRO ) in its operations in

South America, such as the electricity coming from sugarcane

mills, to power a bitcoin mining operation.