The gold market welcomes a heavyweight player as Tether poaches HSBC's top trader

Author: Wu Yu, Jintiao Data

The world’s largest stablecoin issuer, Tether, is hiring two top global precious metals traders from HSBC. Backed by strong financial resources, they plan to build a massive gold reserve to challenge the current dominant players in the gold market.

Sources familiar with the matter revealed that Vincent Domien, HSBC’s Global Metals Trading Head, and Mathew O’Neill, Head of Precious Metals Financing for Europe, Middle East, and Africa, will join this cryptocurrency company in the coming months. Since the information has not been publicly disclosed, these individuals requested anonymity and added that both are currently serving their notice periods at HSBC.

In recent years, Tether has actively expanded into the precious metals sector, accumulating one of the largest gold reserves worldwide — and this reserve is not held by a bank or a sovereign nation but is part of its over $180 billion in reserve assets. HSBC is a giant in the precious metals field, widely regarded as the industry leader after JPMorgan Chase, with operations covering futures trading, gold storage, and global gold bar transportation.

Domien is currently a director of the London Bullion Market Association, the de facto standard-setting organization for the global gold market. He joined HSBC in 2019 from Societe Generale SA and became Global Metals Trading Head in 2022. O’Neill has been with HSBC since 2008.

In the increasingly competitive talent market, the departure of these two individuals is a blow to HSBC’s precious metals business. This year, gold prices have posted their best annual performance since 1979, breaking records consecutively, prompting trading firms, hedge funds, and banks to expand their precious metals teams.

Tether’s flagship USD stablecoin (USDT) holds gold in its reserves, with the latest reserve report showing that in September, the company’s gold holdings were worth over $12 billion. According to Bloomberg calculations, over the past year until September, this Salvador-based company has been adding more than 1 ton of gold weekly.

This makes Tether one of the largest gold buyers in the market — a figure that does not include its gold reserves backing its gold stablecoin (XAUT), nor does it account for private gold investments made with Tether’s billions in profits. The company has also invested in other parts of the gold supply chain, including licensing companies.

USDT can be exchanged for USD at a 1:1 ratio, with its reserves mainly composed of U.S. Treasuries and other assets like gold. As for XAUT, according to Tether’s official website, its circulating market value is about $2 billion, backed by approximately 1,300 gold bars.

Last year, Tether made a profit of $13 billion from its reserves. Despite a relatively small staff, its profitability rivals that of top Wall Street investment banks. This year, the company is expected to earn around $15 billion.

Tether’s growth has benefited from the rapid rise in gold prices this year. The increase in gold prices is attributed to continued central bank gold purchases, trend-driven buying, and the so-called “devaluation trades” — a broad term referring to investors withdrawing from assets due to concerns that sovereign debt and the value of their denominated currencies will erode over time.