El Salvador legalised Bitcoin as a legal tender alongside the US dollar back in 2021.
Tether will collaborate with the Salvadoran government on crypto investments
Photo Credit: Reuters
Tether, the issuer of the USDT stablecoin, has decided to move its headquarters from the British Virgin Islands to El Salvador. The development comes after Tether recently acquired the licence of a virtual asset service provider (VASP) in the Central American country. The Web3 firm aims to make the adoption of blockchains and digital assets mainstream. It feels, given El Salvador's crypto-friendly policies, it makes for the ideal location to conduct a Web3 business from.
El Salvador legalised Bitcoin in 2021, and the digital asset is considered legal tender alongside the US dollar. Tether itself has been pro-Bitcoin in its operations. In 2023, the company said it would start allocating up to 15 percent of its net profits for the purchase of Bitcoin tokens. In 2025, Tether plans to promote the adoption of stablecoins and Bitcoin into the existing global financial system.
Tether reportedly clocked $10 billion (roughly Rs. 86,655 crore) in net profit last year. Experts predict a pro-crypto year ahead, and Tether believes that El Salvador's supportive regulatory environment would be a game changer. “By rooting ourselves here, we are aligning with a country that shares our vision in terms of financial freedom, innovation, and resilience,” Tether CEO, Paolo Ardoino said in a statement.
Tether will collaborate with the Salvadoran government to deliberate on how digital assets can be deployed to chalk out the future of financial technology.
Tether's Search for Greener Regulatory Pastures
Over the past few years, Tether has faced legal challenges owing to the evolving regulatory landscape for Web3 on a global level. In 2021, Tether reportedly paid $41 million (roughly Rs. 355 crore) to the US Commodity Futures Trading Commission (CFTC), to settle charges around misleading investors.
In 2024, Tether was identified by the UN as a tool used for money laundering, attracting regulatory attention.
According to its relocation announcement, Tether said that El Salvador's legislation will help it experiment with solutions to expand stablecoin and BTC adoption in underserved regions. Operating from a pro-crypto region eliminates its fears of going through legal challenges in countries where crypto is still under scrutiny.
Among the recent steps that Tether has taken to grow its service offerings, in 2024 it forayed into tokenising stocks, bonds, funds, and commodities. The move was to enable users to convert assets into products ranging from stablecoins that are pegged to fiat, to digital tokens backed by commodities or other forms of collateral.
Nayib Bukele, the President of El Salvador, is working on a Bitcoin City initiative – that will provide renewable energy to power Bitcoin mining operations. He has also undertaken initiatives to make Bitcoin a part of its tourism boosting initiatives.
The International Monetary Fund (IMF) has time and again warned El Salvador against engaging with Bitcoin. In October last year, the IMF urged El Salvador to limit people's exposure to Bitcoin. Despite these warnings, Bukele has continued to forge ahead with his pro-Bitcoin initiatives.
Owing to its Bitcoin-friendly legislations, Web3 firms like Tether are moving to El Salvador to set up shop. In May 2024, Jack Dorsey-backed Bitcoin mining pool ‘Ocean Mining' established its global headquarters in El Salvador.
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