Tether invests US$20 million in Argentina’s Ualá, expanding Latin America push

Tether has invested US$20 million in Argentine digital bank Ualá, deepening its bet across Latin America as the issuer of the world’s largest stablecoin grows its footprint beyond digital assets.

The investment forms part of Ualá’s US$197-million funding round announced in March, which it plans to use to accelerate growth and expand the company’s financial ecosystem across its existing markets of Argentina, Mexico and Colombia. Regulatory hurdles in these countries prevent Ualá from seeking to integrate Tether’s USDT stablecoin into its platform in the short term, said Founder and Chief Executive Officer Pierpaolo Barbieri.

“We always want to stay at the forefront of new products, but today we are a bank in all of our markets, and given the regulatory environment in Argentina and Mexico, there won’t be any type of stablecoin integration,” Barbieri said in an interview. “Tether is joining solely as a financial investor.”

Tether, which has US$184 billion of tokens in circulation, has made a series of investments in the region over the past months. In April, the company led a Series A round for Argentine crypto platform Belo, and earlier this month it announced an US$18-million investment in Brazilian crypto exchange Mercado Bitcoin. Beyond crypto, Tether last year took a controlling stake in South American agricultural company Adecoagro, building on a deal spree that has included investments ranging from brain-implant technology to sports.

Tether adds to Ualá’s roster of investors, a list that includes Allianz X — which led the company’s last funding round — as well as firms such as Stone Ridge Holdings Group, Tencent Holdings Ltd., Soros Fund Management LLC, Table Holdings LP and D1 Capital Partners. The March financing valued Ualá at US$3.2 billion.

“Ualá’s growth reflects the enormous demand across the region for financial services that are more accessible, efficient, and designed around the needs of consumers,” Tether Chief Executive Officer Paolo Ardoino said in a statement.

Argentine turnaround

Ualá’s 11 million customers across the region are concentrated in its home market of Argentina, where banks and fintechs have been grappling with rising delinquencies after a rapid expansion in credit last year was followed by soaring interest rates ahead of midterm elections. Private-sector lenders have since pulled back on credit growth as household loan quality deteriorated. 

Barbieri said Ualá’s delinquency rates have declined over the past seven months and that its operation in Argentina should return to break-even in “the next one or two months” as credit quality improves. That will allow the company to direct more of its capital toward growth abroad. 

Founded in 2017, Ualá’s expansion efforts are increasingly centered in Mexico, where the company says it sees significant room to gain share despite intensifying competition from banks and fintechs. Mexico remains one of the least-digitized payments markets globally, with cash dominating about 85 percent of small purchases. 

“Mexico is an extremely young market compared to Brazil, a regional pioneer, and Argentina, which has undergone significant digitization in recent years,” said Barbieri. “There is competition in Mexico, certainly, but the total addressable market is infinite.”

Barbieri acknowledged the company is taking a cautious approach toward lending in Mexico while also focusing on adding new products, including a recent launch that allowed investments in US stocks and ETFs. He declined to estimate when the firm will reach break-even in Latin America’s second-largest economy.