Bitcoin Capital. Today we're speaking with Paolo Arduino, the CEO of Tether and the CTO of Bitfinex and Bitfinex Securities about his outlook for 2026. Some of the topics I want to discuss with Paolo today include first and foremost obviously price and the Bitcoin having cycle. Paolo looks at gold, Tether Gold, and the role that hard assets play in Tether's portfolio. How the regulatory outlook has changed over the last 12 months and what to watch for for the year going forward and also which jurisdictions to watch. TradFi's interest in stablecoins and tokenization and also what 2026 holds for Bitcoin treasury companies. Paolo, welcome to the show.
Hey Jesse, thank you for having me.
You bet. So the focus of this conversation is outlook for 2026. And I think what everyone's most concerned about is price. So, I think the big question is, are the four-year cycles over or are they going to continue as they have before?
Alright, that's a good question. So I think that there are different parameters and factors that we didn't have before. Last year was the first year that institutions actually started to join Bitcoin with ETFs. I must say that I'm seeing Bitcoin still too much correlated to the capital markets. And there is something that could technically affect Bitcoin price in the next period that is the so-called AI bubble. This concern about the fact that AI companies are spending too much money in AI infrastructure and data centers and trying to build a gazillion gigawatts of power to install GPUs and all that, right? So if there is a sentiment shift in the AI world that could cause some turmoil into the stock market in the United States, Bitcoin could be affected. But I think more and more there will be funds and even pension funds and governments that are very interested now in Bitcoin. So I think that there will be a supporting force for the price that I think was not present before. So I would imagine that sharp corrections of 80% like we saw in 2022 or early 2018 might not be the case anymore.
Yeah, I think that makes sense. And then on the other side of it too, the block reward is much smaller than it's been previously. So I think the selling from the miners should have less impact and is a lot smaller than what you see coming in from the ETF flows as well. I don't think that matters too much, the sale of the mining output as sell pressure. I mean we have seen recently big accounts with tens of thousands of Bitcoin dumping the market, and even old accounts being reactivated. I think we are in a stage where the more time will pass, the liquidity will grow. I was reading that now in the US, CFTC-enabled markets can list Bitcoin spot products. So that is something that definitely continues to bring Bitcoin eventually, over time, to the same level of gold. Bitcoin will be one of the top two or three most liquid, most traded markets in the world. And so the more the price... without being financial advice, but I think that over time the price will go up and the liquidity will grow 10-fold. And so yeah, I think there will be eventually the coupling. Just now with $2 trillion market cap, Bitcoin is still too volatile because of that, right? The market cap is too little in a certain sense to be stable.
Yeah, last cycle, speaking of gold, I think that was kind of the thesis for a lot of the investors. Paul Tudor Jones had that line that he says, 'Bitcoin was the fastest horse. It was like gold but would move faster.' And then I remember JP Morgan had this really great title to a note. They said that Bitcoin would make gold suffer for years. And now gold is making Bitcoin suffer, right? So gold is outperforming Bitcoin this year. Why is gold's performance better than Bitcoin this year, do you think?
Well, I think that both assets are hedging assets. So people for the last five dozen years held gold as a hedge, well first as money, and then more recently as a hedge against national currencies and inflation and the poor decisions of central banks. Bitcoin is considered basically digital gold and technically should be for many preferable to gold. But the reality is that if we look around the world, only a small portion of the world understands Bitcoin. More education is needed. Gold had a first mover advantage and stayed with us for 5,000 years. And so the knowledge of gold has been narrated across generations. We need multiple generations to understand Bitcoin at the same level of gold and have that intrinsic test of time and trust that is now normally attributed to gold. So I would say simply put, we are at a point where if in the next few years there was a financial reset, people would still prefer gold because people understand gold more easily. In two generations, maybe one generation, it's hard to tell. In three or four, it's very hard to tell. I think that people will prefer Bitcoin. So it's like most of the decision makers in the world are above 50 years old, and usually you are less prone to change. Not everyone, there are great people that like to read and understand new things and get excited about novel technology, but the reality is that most of the people that are ruling the world and controlling wealth and taking decisions are not necessarily convinced by Bitcoin yet, but they know gold very well. There is the Italian Prime Minister Giorgia Meloni — it was news of this week — she is trying to repatriate the gold that Italy had stored outside of Italy. So it shows that governments are starting to brace for something, and the way they do it, for example, many Asian countries are buying large quantities of gold as well. Right now, there is a fear of global instability, and the clear winner for protecting against that is gold, but eventually it will be Bitcoin.
Yes, speaking of countries buying a lot of Bitcoin, I saw a chart last week that showed that Tether bought more gold in the third quarter than any central bank in the world and more than both India and China combined, which is an amazing stat.
More gold. Yeah, more gold.
But wait, and then a lot of people were sending me messages like, 'Oh, it looks like gold is the new Bitcoin.' Things like that. But Tether also bought a lot of Bitcoin too. Actually bought more Bitcoin in the third quarter than gold, which I don't think is as well reported. Is that correct?
So we bought 8,888.88 Bitcoin in the last quarter. We are buying both, and we think for this very reason. The motto of Tether is being the stable company, and so stability — we need to be intelligent about it. I prefer personally Bitcoin, but since we want to bring stability to the world, we cannot look at the world as we wish it was. We should look at the world as it actually is. So we need to protect our users and create a hedge. We need to do it in a way that is historically correct to this exact moment in time. And this moment in time, as I said, still sees gold as an important hedge. That's why if there are market turmoils, gold goes up and Bitcoin unfortunately is still tied to the stock market. Eventually it can untie itself from the stock market. But again, it's not like we are choosing between two children. It's like our major goal is to protect our users, and we're trying to do it in the smartest way possible and the safest way possible, and both assets are very important for this endeavor.
So you see the role in the portfolio is kind of like a hedging tool.
Yes. I think there is a chart that shows the comparison of the US dollar against all the other fiat currencies. We know that there is a lot of printing going on, between two and three trillion per year in new US dollars. But think about that: that is the best fiat currency out there, if you remove the Swiss Franc, but the Swiss Franc is too small. Imagine all the others. So if you look at the chart with the US dollar flat and you draw all the other national currencies, you see basically the Argentine peso lost 94.5% against the US dollar in the last five years. The Venezuelan bolívar lost 99.8% of its value against the dollar in the last five years. And the Turkish lira 81.5%. Someone told me, 'Well, the Venezuelan bolívar cannot go further down.' Well, actually from 99.8% you can still lose another 99.8%. And there is no sign of recovery from there. And of course if you add Bitcoin and gold on that chart, then the US dollar starts to appear weak. But the problem is you have to look at the world as it is, not with this utopia that we sometimes like to have. I try to work — we as people at Tether and Bitfinex try to work to build the world as we want it to be, but also we are fully aware of the world as it is today. So we are hedging against the world as it is today while we're trying to build the world that we wish our children will have.
And if you look at Bitcoin and gold, that old chart when we used to have the Bitcoin versus gold debates — gold would lose on things like divisibility, portability, verifiability. We had that clip recently of Peter Schiff and CZ where he gave him the bar of gold and said, 'Can you verify that this is gold?' And accessibility, but tokenized gold obviously improves gold on a lot of those metrics, right? So I think some people have described Tether as kind of a distribution mechanism or network for T-bills or for US dollars. Do you think that XAUT Tether Gold can do the same thing for gold? Can it act as this big distribution network and get gold in a better form out to more users?
What we built over the last years is the biggest and widest monetary distribution network that humanity ever seen. It started from the US dollar, and we tried with the euro but the reality is that no one wants the euro so it failed miserably. But then we are seeing huge demand for tokenized gold and XAUT. So the market cap of XAUT doubled in the last three months. The demand is huge both from the institutional side and the retail side. For example, there is a US-listed company that bought $150 million worth of XAUT in the last couple of months, and we have huge demand from other listed companies to start adding Tether Gold in their portfolio. On the other side, there is huge demand for tokenized gold and XAUT coming from South America and Southeast Asia. So we are seeing this demand — institutional and retail going together — and that is making XAUT very successful. And we think we are just at the beginning. For the first few years of USDT, no one cared about USDT between 2014 and early 2017. But then slowly, slowly, and then suddenly, it beat every expectation. I believe the same will apply to XAUT. In a certain way, I could see how the US dollar could be the checking account and Bitcoin and XAUT would be the savings account. I think it's smart for people to again look at the world as it is today rather than as they wish it would be when they think about their savings accounts. So it's always important to be pragmatic and not be too biased to a single position. And although Tether is making so much more for Bitcoin in terms of education than it does for USDT or XAUT, the reality is that we face the complexity of still only a small portion of the world understanding Bitcoin. Much more education should be done and will be done, but generations need to change.
Yeah, that's a good argument, the demographic argument for Bitcoin and for tokenized assets and for a lot of the stuff that we do. 21 is set to go live soon. I don't know how much you can talk about it, but what do you think the outlook is for treasury companies given this recent price wobble? Some of them have kind of fallen under pressure here in the last couple of weeks.
Don't put me in trouble. I need to be very...
We're talking about treasury companies very broadly.
Yes, the treasury companies. So, the problem is I'm not very bullish on treasury companies that are just treasury companies. I think that you want a treasury company to have an amazing operational business. The aim for 21 is to be an amazing Bitcoin company that provides Bitcoin services and also has a Bitcoin treasury, a very important big Bitcoin treasury. So I don't think we should focus with 21 on financial engineering, but we should focus on something that is very sustainable, profitable, and successful, and build an amazing business. That is the right way to do it. I think Michael Saylor and Strategy made history and created a lot of innovation. But it's normal for 21 and for other treasury companies to look at what he created, maybe take some ideas, but at the same time try to improve or differentiate. And that's what Jack Mallers is doing with 21. He's doing a fantastic job.
And just one question specific to 21, the last one. Will the Bitcoin operational activities generate the funding to buy more Bitcoin, or will that funding come from another source? How does that work?
Well, the idea is to build products or acquire products that will generate good cash flow that is not tied to the Bitcoin price. You want a business that is viable at any time and also can allow you to purchase Bitcoin at the same time. It does not mean that 21 should stop issuing new shares and continue to buy to expand its Bitcoin treasury, but you don't want that to be the only driving force.
Yeah. One of the structural questions I wanted to ask you about what's changed over the last maybe 12 months or so: I think over the last decade, you could make the argument that regulators and policy makers and traditional finance have maybe influenced the digital asset industry more than we've influenced them. And I think there's some signs that that's reversing. Maybe the GENIUS Act, there's a lot more interest in stablecoins, interest in tokenization. I think that maybe there's signs that that's starting to reverse and our industry is starting to impact them. Do you agree with that? Do you think that we're starting to make some impact within traditional finance? And what are maybe some of the structural changes that you've seen around tokenization and stablecoins over the last 12 months and maybe going forward into the next year?
I think that there are pros and cons. I think tokenization, tokenized securities, and tokenized commodities are going to be massive. That's why I'm very bullish. Bitfinex Securities is something that I think is going to provide unprecedented access to both companies that want to raise capital or tokenize their shares, but also it will provide a new form of much more democratic access for the buy side. So that is something that every government should look at. I know that many governments are looking at this opportunity and they want to be leaders — from El Salvador to Kazakhstan to Middle East countries. They see opportunities to tokenize portfolios of real estate or their refineries, or simply give opportunity to smaller companies that never had access to the financial markets to raise capital. So there is so much opportunity there. The only downside of the huge interest now, and you're right that we are at a point where there is some sort of influence from our industry into institutions and regulators, is that Bitcoin is for Bitcoin. You don't want 99% of Bitcoin being institutionalized.
