Tether Hires HSBC Executives to Bolster Gold Strategy, Challenging Market Leaders

Tether Strengthens Team with HSBC Experts to Expand Influence in Gold Market

Tether, the issuer of the world's largest stablecoin, is poised to make a significant impact on the gold market by hiring two top precious metals trading executives from HSBC. This bold move signals Tether's ambitions to build substantial gold reserves, positioning it in direct competition with the current key players in the market.

HSBC Executives Join Tether

According to sources familiar with the matter, Vincent Domien, Global Head of Metals Trading at HSBC, and Mathew O'Neill, Head of Precious Metals Financing for Europe, the Middle East, and Africa, will join the cryptocurrency company in the coming months. The sources requested anonymity because the information has not been officially announced, adding that the executives are currently serving their notice period at HSBC.

Tether's Expansion in the Precious Metals Market

Recent years have seen a remarkable expansion of Tether in the precious metals sector. The company has successfully built one of the largest gold reserves in the world, reserves not owned by any banks or sovereign nations, and are part of its reserve assets exceeding $180 billion. HSBC is considered a giant in the precious metals market, widely regarded as the leader in this field after JPMorgan Chase, covering businesses such as futures trading, vault storage, and global gold bullion transportation.

Impact of the Joining on HSBC and the Gold Market

Domien currently serves as a director at the London Bullion Market Association, which serves as the de facto standard-setting body for the global gold market. He joined HSBC in 2019 from Société Générale SA and assumed the role of Global Head of Metals Trading in 2022. O'Neill has been with HSBC since 2008. The departure of these two executives is a significant blow to HSBC's precious metals business, especially in light of the intense competition for talent. Gold prices have seen their best annual performance since 1979 this year, breaking records consecutively, as trading companies, hedge funds, and banks have rushed to expand their specialized precious metals teams.

Tether's Gold Reserves and Impact on the Market

Tether's USDT dollar stablecoin's reserve assets include gold, and its latest reserve report shows that the company holds gold worth over $12 billion as of September. According to Bloomberg calculations, the Salvador-based company has increased its gold holdings by an average of more than 1 ton per week in the year through September. This makes Tether one of the largest gold buyers in the market, and this statistic does not include the gold reserves of its gold stablecoin (XAUT), nor does it include private investments in gold with billions of dollars from Tether's profits. The company has also invested in other parts of the gold supply chain, including franchise companies. USDT is backed 1:1 by the US dollar, and its reserve assets primarily consist of US Treasury bonds and other assets such as gold. As for XAUT, according to the Tether website, its circulating market value is approximately $2 billion, and it is 100% backed by approximately 1,300 gold bars.

Tether's Profits and Growth of the Gold Market

Tether made a profit of $13 billion last year from its reserve assets, and despite the small size of its workforce, its level of profitability is comparable to the top investment banks on Wall Street. The company expects profits of approximately $15 billion this year. Tether's growth is due to the rapid rise in gold prices this year. Gold prices have risen thanks to continuous central bank purchases of gold, trend-following purchases, and so-called "currency devaluation trades" - a broad term referring to investors withdrawing from these assets due to concerns about sovereign debt and the value of currencies denominated in it over time.