Who is the biggest purchaser of the world’s biggest safe haven asset – gold?
China? Japan? One of the Gulf countries, perhaps?
In fact, the single biggest buyer of the precious metal last year was a company you’ve probably never heard of – a crypto firm called Tether.
The El Salvador-based company runs USDT, the world’s biggest stablecoin, which is a form of crypto backed up by hard currency.
It serves as a conduit between riskier, volatile cryptocurrencies and the conventional finance system, essentially used as an offshore dollar.
Yet Tether bought more gold last year than anyone, according to European Central Bank data.
It keeps it stored in a James Bond-style Swiss former nuclear bunker, according to Tether’s boss.
Tether says it also owns as much US Government debt as some G20 nation states, some $135bn (£101bn), which is more than South Korea.
It is a huge player, almost taking on the characteristics of a private central bank. Yet it employs just 200 people.
It is also, perhaps inadvertently, entangled in the questions around the funding of Nigel Farage’s Reform party.
One of Tether’s significant shareholders is Christopher Harborne.
Last August, Harborne gave £9m in cash to Farage’s Reform party – the biggest party donation in British history. He gave a further £3m to Reform in October and an additional £3m in January. All the donations were declared.
Harborne had given £5m directly to Farage, a previously undisclosed personal gift which was the subject of parliamentary investigations, before Farage resigned as an MP.
Farage and Harborne have both said there were no strings attached to the personal gift, nor to the political donations to Reform.
The Bank of England’s governor Andrew Bailey recently confirmed that Farage raised the issue of cryptocurrency regulation and the related issue of central bank digital currencies with him in September last year.
He said Farage made his views “very clear”, but the “intervention” did not change the Bank’s policy, and that in general he could spot “lobbying” and knew how to discount it.
There was a specific issue Farage was concerned about – speculation that the Bank of England would push ahead with a limit on holdings of potential sterling stablecoins of between £10,000 and £20,000.
The industry was lobbying hard against it.
My understanding is that Farage did not raise Tether specifically with the governor, but he did talk about stablecoin regulation in general.
It raises reasonable questions about the precise details of that conversation and the scope for any possible benefit to Tether and its shareholders from shifts in Bank of England policy.
The Reform leader had already spoken openly about embracing cryptocurrencies.
“Tether is about to be valued as a $500bn company,” he told LBC presenter Nick Ferrari in September, the day before meeting Bailey.
“This world is enormous, and I’ve been urging for years that London should embrace it. We should become a global trading centre for this stuff under proper regulation.”
On the wider conversation, Farage’s team say that “his remarks to Andrew Bailey are consistent with his long-held belief that the UK should be a global hub for regulated cryptocurrency innovation and investment”.
To that end, last May when Reform was ahead in the polls, the only piece of draft legislation it had published was its Cryptoassets and Digital Finance Bill.
It had a fleeting reference to stablecoins, and no reference to the Bank’s existing plan to limit personal holdings.
I read it and downloaded it.
It has since disappeared from the Reform website and from the web generally.