Tether launches $400M private-credit fund as defaults hit five-year highs
In brief
- Tether and Fasanara launched StableFund on September 9 with $400 million in sponsor capital
- StableFund targets $3 billion from institutional investors for short-duration asset-backed loans
- Blue Owl's default rate hit 2.8% in Q2, highest in five years amid private-credit stress
Tether's role in the new fund
Fasanara will manage the portfolio, while Tether will help originate USDT-linked financing opportunities and provide structural support. Fasanara manages more than $6 billion in assets across its existing strategies. The partnership positions Tether as both capital provider and deal originator, a dual role that deepens its footprint beyond the crypto lending market it already dominates. Tether controlled around 60% of the $23 billion centralized crypto-lending market at the end of June, according to Galaxy Research.
StableFund is structured as an evergreen vehicle, allowing it to raise and deploy capital continuously rather than wind down at a fixed maturity date. This structure mirrors the open-ended approach of traditional private-credit funds and signals Tether's intent to build a long-term presence in the sector.
The timing challenge: rising defaults
The fund's launch comes as the private-credit market faces mounting stress. Blue Owl's default rate rose to 2.8% in the second quarter, its highest in at least five years. Defaults at major private credit funds reached their highest levels since at least 2021, according to data cited in the announcement. An August Wall Street Journal analysis found worsening loan health and investor returns across publicly traded funds overseen by Ares Management, Blackstone, Blue Owl Capital and Golub Capital.
The Financial Stability Board has flagged a broader risk. The organization warned that private credit has yet to be tested through a prolonged economic downturn, meaning the sector's resilience in a recession remains unproven. That uncertainty hasn't deterred Tether from entering the space at scale.
What this means
Tether's move signals confidence that USDT can function as a financing tool for real-world credit markets, not just crypto trading and lending. By pairing with an established fund manager and targeting institutional capital, Tether is positioning itself as a bridge between cryptocurrency and traditional finance. The $3 trillion private-credit market represents a far larger addressable opportunity than crypto lending alone.
