Welcome to Future of Finance, where Fortune asks prominent people at major companies about their jobs, how their firm fits into the crypto ecosystem, and what it all means for how we use money.
Tether is the biggest stablecoin issuer in the world, but it is also the most criticized. In recent years, critics have cast doubt on the nature of its reserves and the specific holdings backing the stablecoin, which boasts a market cap of $89 billion.
Yet Paolo Ardoino, Tether’s new CEO who has long been the public face of the company, said he feels vindicated as other crypto companies, and even some traditional banks, have gone bust while Tether has thrived.
Ardoino, who’s also the CTO of Bitfinex, spoke with Fortune about the exchange’s strategy in emerging markets and why he wasn’t quick to celebrate Binance and Changpeng “CZ” Zhao making a deal with U.S. prosecutors.
(This interview has been edited for length and clarity.)
How did you begin your career?
I started learning coding when I was 8 years old. I remember my father bought an old 386. It was an Olivetti—an old computer company, an Italian one, because I’m Italian. I remember that he said that it cost two months salary, so it was a big expense. My father was a simple employee and a farmer as well. From there, I just learned about coding. I have always been excited about building and creating things through programming. To me it is a form of art. With art, you can create universes, and with coding you can do that as well. Fast-forward, I went to a computer science university in Genoa, and graduated from there. I worked for a couple of years as a researcher on a couple of really interesting projects on behalf of the university. And then, as sometimes happens, well, at least in Italy it happens all the time, you know, the pay was really small. We were doing wonders, and the pay was small, so I decided to look at something else.
I was excited about many things in computer science. I was excited about art and programming, I was excited about open source, about distributed applications—and that was before Bitcoin—and resilient networks like BitTorrent. At the university and in my private time I cultivated all of that, and then, as I said, I worked as a researcher and then I decided to look at something else. In the meantime, I was excited about finance, because finance is one of the things that feels like it is controlling the world. And so I was always looking at how finance was impacting society. I consider myself a little bit of an activist when it comes to freedom of speech and communications. So, in a way, I decided to get to know more and more about finance. To do that, I started working for a few hedge funds that needed to build software for their hedge funds and for their portfolio management. And I ended up eventually in London, creating my startup. It was 2012, 2013, and we had a few customers, building software for hedge funds and family offices for U.K. and Swiss markets.
When did you get interested in crypto, and how did you first get involved?
Around 2012, 2013, I heard about Bitcoin. I was reading the Bitcoin white paper. The thing that excited me about Bitcoin first was the blockchain technology, because in my day-to-day life in the financial sector I was wasting my time trying to reconcile numbers across tens of different trading venues, custodians, and clearing houses—and so on. That was really because the technology used by the old, traditional finance is terrible. It’s 30 years old.
Blockchain actually is beautiful because everyone that has a node sees the same numbers, sees the same thing. Blockchain could help to modernize, dramatically modernize, the financial infrastructure and technological infrastructure. So I started looking at Bitcoin first from that angle, and then after a few months, I started thinking about Bitcoin as a currency—potentially the most important currency in the world.
In 2014, I met Giancarlo Devasini, the CFO of Bitfinex. He had the exchange, and I had my own startup. I agreed to step in and help Bitfinex on one of the weaknesses it had at that time—the speed of the matching engine, which is the core part of a trading platform. BitFinex in 2014 was already one of the top two exchanges in the world. There were a few of them, of course, at the time. There was Kraken and Coinbase, OkayCoin, then Bitfinex and Bitstamp. And Bitfinex more and more was gaining traction because it has margin trading—it has really cool features—but the matching engine was not passable. So I was tasked to step in and start fixing that.
From 2014 to mid-2016 I only focused on the matching engine and on basically improving the speed of the trading platform, nothing more than that. Then in mid-2016, the exchange was hacked. At that point I was asked to become the CTO. At that point, the level of confidence in my work was really high. Since I proved myself as a person able to build complex things and also deliver good products, I was tasked to take care of the entire platform instead of just the matching engine.
Could you tell me a little bit more about Bitfinex’s strategy as it continues to expand in emerging markets?
I think the emerging markets—developing countries—are the ones that actually can most leverage the crypto industry. Those are the ones more subject to the devaluation of their national currencies, the ones more affected by inflation. Everyone is affected by inflation, even people living in the U.S. But if you live in Argentina, if you live in Venezuela, that is a much more evident issue. And so with Bitfinex we think that it’s important to serve customers that are in the places that really need your help. Also, of course, Europeans are really excited about crypto but I think, in a way, selling services to Europeans is like trying to sell ice cream to an [Inuit]—they don’t need that. Europe and North America have already the best trading and payment rails in the world.
Tools like Bitfinex Pay and/or Bitfinex peer-to-peer trading are perfect for emerging markets because they are in a situation of need, and we are big believers in the potential of Bitcoin and crypto, in general, to create a sort of lifeboat for many people living in emerging markets. Argentina defaulted a few times on their debt, and so they had almost a reset of their currency. Imagine a family that saved money for 10 years, and then it gets wiped out. That is really unfair, right? I think that this is the first time in history where people can choose to opt out, and they can choose rightfully to protect their families from the bad decisions of the central banks of their home countries.
What do you think about the deal Changpeng “CZ” Zhao and Binance made with U.S. prosecutors? Is that kind of thing advantageous to Bitfinex?
Unlike many of our competitors, we don’t like to dance on the graves of others. I think that is something quite sad that some other CEOs, in a way, were being all cocky after the event. I think that it is important to just think about your company, without expecting to be bettered, or to basically only survive, just because others are falling.
Bitfinex is a different company compared to Binance. We are a smaller exchange. We are smaller by decision. We take pride in our compliance work, and we take pride in our technology. And over time we renounced different opportunities because they were outside of our risk interest. It is not true for many other exchanges that decided to be more exposed to risk. We want to win the marathon—because I believe this is a marathon—not because the other guys are falling.
How have things been going since taking over as CEO at Tether in October, and what is your vision for the company?
It’s business as usual. Both in Bitfinex and Tether, I always consider myself more than a developer, and in the last years I’ve stepped up to work in the strategy side of the companies. I’ve been more and more involved in execution of such strategy and the public face for for Bitfinex and Tether. Tether has grown to be a behemoth, and I’ve demonstrated to be able to lead both the teams and the strategy.
I think Tether is a company that is almost unique in its kind. It is a company that, for many years, a lot of people, maybe not a lot of people but some really loud voices, always waited for Tether to go down, cheering for all the other companies in the crypto industry. I remember when most of the mainstream media was supporting FTX. Now of course, everyone is trying to distance from from that. But it’s true until last year, like one year, three months ago, everyone was supporting FTX—as everyone was cheering for Celsius, for BlockFi, for Voyager, and Genesis, and all the companies that went down in 2022.
Even this year, three banks, four banks, Silicon Valley Bank, Signature, Silvergate, and also Credit Suisse, they went bust. So when I hear bankers pointing the finger at us, when I hear other people in the crypto industry pointing the finger at us, I always remind them about what’s happened. They should look in their own house before pointing the finger at us.
Tether is the most solid company that you can find in this industry. It’s been been building innovation, the stablecoin. The second innovation that Tether created is fully reserve banks, fully reserve banking. If you think about it, all the banks—as Silicon Valley, Silvergate, Signature, and Credit Suisse proved—they are highly leveraged. In the case of these American banks, they were leveraged on municipality bonds, 10- to 20- to 30-year municipality bonds. Tether is heavily scrutinized and has always proved—even when Tether had commercial paper—Tether always proved to be solid.
Why do you think Tether’s stablecoin has grown so much recently compared with peers?
I think it’s fairly clear why. The pitch of our competitors is directed to Wall Street, and bankers, and institutions. But it’s crazy how—as I said for Bitfinex, it’s also true for Tether—if you are European, you don’t need a dollar stablecoin. If you’re in the U.S., you don’t need a dollar stablecoin. Everyone has a bank account, has credit cards or debit cards, and access to loans and everything.
There are 3 billion people that are unbanked, that are left out from the financial system, not because they’re bad people—they’re great people—just in general they are too poor to be of interest to any bank. So our pitch is, we are not servicing U.S. customers, and we are not interested in European customers. Our focus has always been on developing countries and emerging markets.
Tether has definitely been resilient, but at the same time it hasn’t released a full audit. What is the issue there?
First of all, all of our mighty competitors don’t have a full audit as well. Although they were considered, again, the heroes in the space, yet they have an attestation. Sure, they are smaller than us, but let’s ask ourselves why. The reason isn’t that Tether doesn’t want a full audit. Tether is working, and has been working, and I’ve said too many times already publicly, on a full audit and is trying to get one of the big auditors to do a full audit. But look at what happened in the U.S. from Congress. Auditors were suggested to not take on new crypto customers, crypto-related customers. An auditor taking a new customer in crypto could be an enormous liability, especially after FTX.
Our attestation is also different from our competitors’—if you look at the details of the attestation and the processes published by BDO, they are saying this attestation shows how BDO is actually requesting direct confirmation of the bank balances from all our counterparties. So, they’re not just trusting our word. They are really thorough in their approach. Also, we keep $3.2 billion in excess reserves. We could have shared, we could have distributed those billions. That’s our money, our profits. We could have distributed those. We didn’t because we are committed to making Tether the most solid company not just in the crypto space but in the world.
Again, all banks are doing fractional reserves—Tether is not. We want to demonstrate that it is possible to be a healthy company and keep the vast majority of the profits inside the company, or inside the group, to give additional reassurance to your users. We are doing a wonderful job. Of course, we are still committed to work with the auditors to get an audit, and that is our priority.
In your opinion, what is the future of finance?
I don’t believe crypto is here to kill finance. I believe that Bitcoin is—first of all, I make a big distinction between crypto and Bitcoin. To me, Bitcoin is the ultimate currency that is the safeguard, the life vest for everyone that wants to have an opt-out from the current system. The current system is heavily flawed. I don’t think crypto, or the entirety of crypto, can save finance.
I think Bitcoin is more and more entering and being accepted by the traditional financial system. Bitcoin can be used in two ways, through an ETF, through a banking product, or if people want to, they will always be able to opt out and use Bitcoin independently. That is the best reassurance that anyone could have. This is the first time in history that people can actually hold their own money. That is something that never happened before and something that’s changed finance forever. I think that Bitcoin is that element that will force finance over the next years to be more truthful, to be more open, and be more honest. But Bitcoin is a newborn. It will take time, but I think it’s extremely exciting.
