Tether’s Next Move: Turning Private Shares into Tradable Tokens to Keep Investors Liquid

How a private liquidity squeeze may get a crypto-style fix

Tether — the company behind the USDT stablecoin — is said to be weighing a way to give private investors an easier path to cash: tokenising its equity. In plain terms, that means creating digital tokens that represent slices of ownership, which could be bought and sold on crypto-style rails instead of through slow, private-share channels.

If true, the move would be as much about solving a liquidity problem as it is about chasing blockchain efficiency. For investors stuck owning big private stakes, tokens promise faster trading and clearer prices. But converting private stock into tokens would also bring legal, custody and market-shaping headaches that matter a lot to shareholders.

Why Tether’s idea matters now: company profile and investor pressure

Tether is best known for USDT, one of the largest stablecoins used across the crypto economy. The firm is private, with shareholders and early backers who have limited ways to sell without a public market or a private sale. That limits liquidity and pins a lot of value into a thin market.

Tokenising equity can be a pressure valve. It could let founders and early investors trade smaller pieces more often, or it might be used to attract new investors who prefer blockchain settlement and 24/7 markets. For a firm whose business sits squarely in crypto plumbing, offering a token-based exit makes sense culturally and operationally.

But it also changes the company’s relationship with investors. Tokenisation can speed price discovery and invite a broader investor base — and that can be good or bad for existing shareholders depending on how it’s structured.

What tokenisation would look like in practice

There are a few basic ways to turn private shares into tradable tokens. One path is converting actual legal share ownership into digital receipts held by a custodian. Another is issuing tokens that track economic exposure while legal title remains with a trust or nominee. Each choice affects rights — voting, dividends and legal claims — and those details drive investor appetite.

Key technical pieces include custody (who holds the legal shares), token design (do tokens carry voting rights or just cash flow?), transfer rails (which trading venues or broker networks will process trades?) and settlement rules (how are trades cleared and finalised?).
A token that simply mirrors a share’s cash flows but not its votes might trade easily; one that carries full shareholder rights faces more legal friction.

Liquidity models matter too. Tokens could trade on regulated platforms that restrict who can buy, or on broader crypto venues with lighter controls. The former limits liquidity but eases regulatory compliance. The latter boosts market depth — and regulatory risk.

Rules, precedents and where regulators are watching

Tokenising equity sits at the intersection of securities law and new ledger tech. In the US, the Securities and Exchange Commission has been clear that many tokenised assets look like securities when they represent ownership and profit rights. That means registration, disclosure and trading rules can apply.

Recent moves by large market infrastructure players to pilot or offer tokenisation services make clear regulators are thinking about practical paths forward. Those experiments provide a technical template — custody, transfer and settlement tools — but they don’t remove legal gates. Any token offering that effectively sells shares to the public without proper registration risks enforcement.

For Tether specifically, the regulatory spotlight will be intense because of the firm’s size and role in crypto markets. How tokens are structured, who can hold them, and which platforms host trading will determine whether regulators see an innovation or an end-run around investor protections.

What this could do to markets and shareholder value

If tokenisation delivers genuinely wider trading, it would likely lift liquidity and produce steadier price discovery for Tether’s private stock. That’s often good for early backers who want optionality and for later investors who prefer transparent valuation. Faster trading tends to compress bid-ask spreads and reduce price jumps when big holders sell.

But there are trade-offs. Broader access can invite speculative flows that increase short-term volatility. A token market that lacks the usual gatekeepers — accredited investor checks, broker-dealer oversight — might show big swings and disconnect from the company’s long-term fundamentals.

From an investor’s viewpoint, the news looks mixed but actionable. Tokenisation can be a net positive if it is tightly governed, limits who can trade, and preserves legal protections. If it becomes a free-for-all on unregulated exchanges, it could create noise and valuation risk that harms patient investors.

Risk scenarios and what investors should watch next

There are a few clear scenarios to keep an eye on. Best case: Tether issues tokens that represent legal claims, trades only on regulated venues, and keeps voting and disclosure robust. That would raise liquidity without upending governance.

Medium case: Tokens trade more widely but with limits on rights. Liquidity improves but price moves may be driven by short-term traders rather than business fundamentals. That suits some shareholders but increases volatility.

Worst case: Tokens are sold or listed in a way that attracts regulatory action or forces retroactive changes to investor rights. That could freeze markets or reduce the value of existing stakes.

Signals investors should monitor: the token’s legal structure (full shareholder claim versus economic-only token), approved trading venues, any registration filings or SEC commentary, custody arrangements, and whether major market infrastructure firms sign on. Those facts will show whether tokenisation is a careful liquidity tool or a risky experiment.

At its best, tokenising private equity is a useful innovation. At its worst, it can swap a slow, structured exit for a fast, messy one. For shareholders, the difference will come down to legal detail and which market players get involved — not just the tech.

Sources

• cointelegraph.com
• cointelegraph.com
• x.com
• cointelegraph.com
• cointelegraph.com
• cointelegraph.com