Tether Backs Ark Labs’ $5.2 Million Bet on Bitcoin’s Stablecoin Revival

In brief

• Ark Labs secured backing from Tether and Anchorage Digital.
• The firm plans to advance stablecoins and real-world assets on its Bitcoin layer.
• The technology processes transactions off-chain, with fail-safe measures.

Tether has backed Ark Labs in a $5.2 million seed round, as the Bitcoin infrastructure startup aims to expand stablecoin activity on Bitcoin through Arkade, the firm’s programmable layer. The Lugano, Switzerland-based firm plans to use the funding to bolster the Bitcoin network’s use in supporting stablecoins and digital representations of real-world assets, according to an announcement on Thursday. Tokenized assets primarily exist on networks like Ethereum and Solana that natively support smart contracts.

But Ark Labs is betting that tides could shift as Bitcoin-based infrastructure supports commercial functions such as authorizations, merchant holds, and escrow.  The company’s latest funding round was also backed by Anchorage Digital, a federally chartered digital asset bank helping Tether gain a regulated foothold in the U.S. Ralph Ho, PayPal’s former vice president and treasurer, and several venture capital firms also participated, bringing Ark’s total institutional backing to over $7.7 million, per the announcement.

Arkade seeks to improve upon Bitcoin’s existing scalability by executing transactions off-chain, a design feature that also prevents the movement of funds from being broadcast publicly.  Although users essentially have to lock up their Bitcoin and trust a central server to participate in activity, Arkade is designed to allow people to retrieve their Bitcoin if things go wrong, according to Ark Labs. “If the server happens to go offline for whatever reason, you keep a copy of your latest Bitcoin balance as a pre-signed transaction that the server gave you,” Alex Bergeron, head of ecosystem at Ark Labs, told Decrypt. “And then if the server goes away, you get to broadcast those transactions on-chain, and you’re left with vanilla Bitcoin.” Tether hasn’t committed to issuing its flagship stablecoin on Arkade yet, Bergeron added, noting that its support for assets beyond Bitcoin hasn’t been battle-tested. But Ark Labs hopes that the company could become part of USDT’s $184 billion footprint by the end of the year. Tether ended support for USDT on Omni in 2023, the Bitcoin layer on which the stablecoin was launched in 2014. Bergeron said Ark Labs has already secured a “smaller issuer” widely used across the Global South. Regarding Lugano, Tether announced a partnership with the Italian-speaking city in 2022 to establish the area as a blockchain hub. Earlier this month, the duo unveiled the second phase of “Plan B,” a $6.3 million commitment by Tether to build long-term digital sovereignty. In all likelihood, the city isn’t far from a former nuclear bunker, where Tether has reportedly been stacking 1 to 2 tons of gold per week. In January, those reserves were worth $24 billion.