Tether is becoming a leader in the crypto lending business. The crypto lending business, which involves providing liquidity backed by cryptocurrency to companies and individuals, has undergone a series of transformations that have changed its composition. Previously dominated by companies fully dedicated to this area, the sector has seen an unexpected rival emerge as its leader in recent years.

Tether, known primarily for its stablecoin projects, now dominates the crypto lending sector with a portfolio that accounts for over 70% market share by the fourth quarter of 2024. According to a recent report from Galaxy Digital, which is currently the second largest lender, Tether has become a lifeline during the liquidity sell-off.
Alex Thorn, head of the research department at Galaxy Digital, stated:
They started during the downturn, they were likely a really necessary source of liquidity in this market. They are clearly a major player.
While some believe that this newfound game might be a risky bet, Tether claims that all its loans are collateralized and has disclosed these figures in several testimonies. "As stated in our latest quarterly report, all loans are broadly collateralized (in Bitcoin) and are managed conservatively in proportion to our equity reserves," the firm emphasized.
Tether claims that their lending business is secure, even when they do not disclose the nature or participants of these loans. "While we do not disclose the specific structure of each agreement, all lending activity is aimed at ensuring full and liquid backing for USDT at all times. Tether has never defaulted on any loan," the company told Bloomberg.
Although the crypto lending market is still relevant, it has significantly shrunk after the fall of several major players such as Celsius, Blockfi, and Genesis, which were once leaders in the sector. The central crypto lending business had a market size of $64.4 billion in the fourth quarter of 2021, according to the report, and its current size is approximately half of that amount.
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