Key Insights
- •Arthur Hayes warns that Tether's move into Gold and Bitcoin could amplify risks if markets suffer a sharp pullback.
- •S&P Global Ratings published a “weak” stability score following an analysis of Tether’s array of reserves.
- •Even so, Tether’s robust corporate holdings and solid profits help balance out those concerns, argued an expert ex-analyst of Citi bank.
BitMEX co-founder Arthur Hayes observed earlier today that Tether is quietly repositioning itself ahead of what he expects to be the Federal Reserve’s next round of rate cuts. In his view, the company’s latest attestation makes the shift easy to spot: it’s holding fewer Treasuries and leaning more heavily into Bitcoin and gold. Hayes argues that this isn’t a random adjustment. Instead, he sees it as a sign that Tether is getting more comfortable with alternative assets, especially those that tend to gain strength once interest rates start to fall.
Tether Shift Into Bitcoin and Gold Heightens Downside Risks?
In a post on X, Arthur Hayes warned that Tether’s new strategy isn’t without risk. He said a sharp drop in Bitcoin or gold could squeeze the company’s equity cushion. It could reopen old questions about USDT solvency. According to him, the shift in reserves looks like a clear attempt to adjust to a changing macro environment.
Notably, Tether’s latest report puts its total assets at about $181 billion. Most of that sits in cash, T-bills, repos and money-market instruments. The filing also shows nearly $13 billion in precious metals and close to $10 billion in Bitcoin. Secured loans stand at more than $14 billion, with smaller allocations rounding out the rest.
S&P Flags “Weak” Stability Score After Reviewing Tether’s Reserve Mix
S&P Global Ratings issued a “weak” stability score after reviewing Tether’s mix of reserves. The agency said Tether is leaning further into assets that swing in value, and warned that this mix could leave USDT exposed if markets turn violent.
Former Citi Analyst Argues Tether Profits and Corporate Assets Offset Reserve Concerns
Former Citi analyst Joseph said Tether’s public reserve disclosures only cover the assets directly backing USDT. He explained that a separate corporate balance sheet holds equity stakes, mining operations, corporate reserves, and extra Bitcoin that never shows up in the attestation. In his view, these additional holdings change the company’s overall risk picture. Joseph also described Tether as highly profitable.
He noted that the firm holds roughly $120 billion in interest-bearing Treasuries. Since 2023, that pile has generated close to $10 billion in yearly profit, while operating costs have stayed low. According to him, this efficiency drives Tether’s equity value. He pushed back on earlier reports of a $20 billion raise at 3%, saying that figure pointed to a valuation he did not consider realistic.
He added that Tether’s structure differs sharply from banks. Most banks keep only 5% to 15% of deposits in liquid assets and rely on central banks as a backstop. Tether has no such safety net. Joseph said the company leans on strong returns to compensate for the absence of a lender of last resort.
Earlier, former Tether CEO Paolo Ardoino pushed back against S&P’s downgrade of USDT. He said traditional rating agencies don’t worry him, arguing that their past models failed to spot the real risks inside companies that later collapsed. Ardoino stressed that Tether holds no toxic assets. He described the firm as overcapitalized, profitable, and built on a reserve base that he considers solid. He added that the company’s growth reflects a broader shift toward new financial systems that sit outside the traditional banking world.