Stablecoin issuer Tether’s investment arm has taken a minority stake in Elemental Altus (ELE), a publicly-listed precious metals investment company.
Tether Investments is aiming to diversify the assets that back its stablecoin USDT, the world’s largest such token with a market capitalization of $155 billion, expanding into tangible assets and precious metals, according to an announcement on Tuesday.
Tether acquired 78,421,780 common shares in Elemental from La Mancha Investments, a Luxembourg-based mining investment firm.
Elemental’s Toronto-listed shares spiked nearly 23% to 1.77 Canadian dollars ($1.30) following the announcement. They closed at 1.53 Canadian dollars on Wednesday, 6.25% higher than before Tether’s investment. At press time, Tether’s stake is worth nearly $88 million.
CEO Paolo Ardoino said the investment, which saw Tether take a stake of around 33.7% stake in Elemental, reflects its “confidence in the fundamentals of gold and its critical role in financial markets.”
“Elemental’s royalty model provides diversified exposure to gold production around the world, aligning strategically with our vision for Tether Gold and future commodity-backed digital asset infrastructure,” he added.
Tether referred to increasing its exposure to gold as a “dual pillar strategy”, alongside its holdings of over 100,000 BTC ($10.7 billion).
With regulation of stablecoins on the horizon in the U.S., issuers such as Tether are preparing for requirements to be compliant when it comes to the assets that back their tokens.
This could extend to diversification of assets. It was suggested by JPMorgan earlier this year that Tether could have to sell some of its BTC in order to comply with the proposed regulation.