A $180B Question: Can Tether’s (USD₮) Audit End the Doubt?

The El Salvador-based Tether (USDT +0.06%) has engaged KPMG to conduct its first full financial statement audit and has hired PwC to help prepare its internal systems for the same, according to a report by the Financial Times this week, citing sources familiar with the matter.

The move brings scrutiny from the Big Four accounting firms on the founder of the original stablecoin, after years of relying on point-in-time attestations.

On March 24th, Tether announced that it has “entered a formal engagement with a Big Four accounting firm to complete its first full independent financial statement audit.”

The company didn’t provide the firm’s name at the time, but CFO Simon McWilliams said that “the audit will be delivered.”

In the official announcement, Tether CEO Paolo Ardoino noted that this audit represents their years of work “to strengthen our systems so that Tether can meet the highest standards applied in global finance.”

Tether called this upcoming review the largest inaugural financial audit in the history of financial markets, covering its mix of traditional holdings, tokenized liabilities, and digital assets. Its scale of holdings is comparable to major sovereign institutions.

The company believes this audit will secure trust in the stablecoin through compliance programs and stronger transparency measures.

“Trust is built when institutions are willing to open themselves fully to scrutiny.”

– Ardoino

All these years, the company has successfully processed all its redemption requests to convert USD₮ into US dollars. Despite that, Tether has faced repeated accusations that its reserves don’t match its stablecoin token supply, but this audit will invalidate those concerns.

“For the hundreds of millions of people and businesses who rely on USD₮ every day, this audit is not just a compliance exercise; it is about accountability, resilience, and confidence in the infrastructure they depend on,” said Ardoino.

The Backbone of the Global Crypto Economy

Launched in 2014, five years after Bitcoin (BTC +0.44%)  and a year before Ethereum (ETH +1.67%), Tether is a blockchain-enabled platform that facilitates the digital use of fiat currencies and aims to disrupt the conventional financial system through its stablecoin.

Tether’s flagship stablecoin USD₮ was actually launched under a different name, RealCoin, and the project was run by co-founders Reeve Collins, Craig Sellars, and Brock Pierce. The token, however, didn’t gain traction until it was undertaken by iFinex, which also owns the Bitfinex crypto exchange.

Stablecoins, as the name suggests, are a type of cryptocurrency designed to maintain a steady value by pegging to a stable asset like the US dollar at a 1-to-1 ratio, minimizing price volatility.

These stable digital currencies bridge the gap between traditional fiat currencies and digital assets, allowing for faster, cheaper transactions and cross-border payments. They also serve as a stable store of value within the volatile crypto market.

The ability of these blockchain-based dollars to move money efficiently and cost-effectively has led traditional finance (TradFi) giants like JPMorgan Chase and PayPal to rush to issue them as well.

Tether, however, dominates the sector. USD₮ is the largest stablecoin, accounting for 59.48% of the stablecoin market, as per CoinGecko. Meanwhile, the second-largest stablecoin, Circle USDC, with a market cap of $77.76 billion, only has 25% of the market share.

There are currently more than $184 billion in USD₮ in circulation, according to the Tether Transparency page, which has experienced tremendous growth over the last six years.

At the beginning of 2020, the market cap of USD₮ was sitting around $4.2 billion, only to surge more than 20x in two years.

As Ardoino noted in an interview with Fortune, the onset of pandemic lockdowns pushed people in inflation-prone places towards stablecoins as they couldn’t buy greenbacks on the black market.

In May 2022, the USD₮ market cap climbed to $82 billion, and after a brief decline for the rest of that year, when it fell to about $65 billion, the market cap resumed its uptrend and continued to grow, reaching a record $187 billion in mid-January 2026.

Now, with a market capitalization of $184 billion, USD₮ is the world’s 3rd-largest cryptocurrency, second only to Bitcoin and Ethereum, whose market caps are $1.32 trillion and $241 billion, respectively.

Initially, USD₮ was launched on the Bitcoin blockchain using the Omni Layer protocol, but it has since expanded across a wide range of networks. It is currently available on several leading blockchains, including Ethereum, Tron  (TRX +0.57%) , Solana  (SOL +1.84%) , Aptos  (APT +2.27%), Avalanche  (AVAX +3.49%), Ton  (TON +0.76%), Celo  (CELO +2.82%), Cosmos  (ATOM -0.26%), Kaia (KAIA +2.23%), Near (NEAR +1.43%), Tezos (XTZ +0.3%), Polkadot (DOT +1.63%), and Liquid.

In addition to the US dollar, Tether has issued tokens pegged to the Chinese yuan (CNH₮), Mexican peso (MXN₮), and gold (XAU₮).

Compared to USDT, though, the growth of CNH₮, MXN₮, and XAU₮ has been rather limited, with only $20.5 million, $19.5 million, and 707K troy ounces ($2.5 bln) worth of tokens circulating in the market, respectively.

Tether has over $192.8 billion in total assets (cash, Treasury bills, loans, investments, and more) backing $186.5 billion in issued tokens, leaving $6.33 billion in excess reserves.

Inside Tether’s Longstanding Transparency Issues

As the issuer of USD₮, Tether mints new tokens and controls the number in circulation. To maintain stability and avoid volatility in the crypto market, the stablecoin is backed by Tether’s reserve assets. However, concerns about the transparency and composition of these reserves have made Tether controversial.

It is actually one of the most controversial companies in crypto history, with the core issue being whether USD₮ is actually 1:1 backed. The company claims that USD₮ is 100% backed by actual assets, but the lack of full audits has made it harder for the public to trust Tether.

To provide clarity, Tether routinely publishes a reserves report, which has shown that the company maintains the majority of its USD₮ reserves in cash, cash equivalents, and other public market assets. A relatively small portion of the reserves backing USD₮ consists of Other Investments and Secured Loans.

However, the lack of regulatory clarity in the cryptocurrency market has made it difficult to verify the liquidity of these assets and whether the loans have been safe or made to risky projects.

A 2021 Bloomberg investigation found that Tether claimed holdings of commercial paper and money market securities, making it one of the largest holders of such debt, but they couldn’t find any Wall Street traders who had witnessed Tether purchasing these vast amounts of debt.

A couple of years later, though, it was revealed that Cantor Fitzgerald had been helping manage most of Tether’s bond portfolio. Howard Lutnick, Trump’s commerce secretary and former CEO of Cantor, also confirmed this.

However, the lack of a systematic examination of the company’s records to assess their accuracy, combined with Tether’s size, drew the attention of several regulatory authorities.

In 2019, the New York Attorney General (NYAG) filed a lawsuit against iFinex for allegedly using Tether’s reserves to compensate for Bitfinex’s loss. The funds were given by the exchange to its Panama-based payment processor, Crypto Capital Corp., which stole the money and was charged with money laundering.

Tether had extended a $850 million loan to its sister company, Bitfinex, in 2018 to cover frozen funds the exchange could no longer access through this third-party processor.

The NYAG’s office probed Bitfinex for mixing funds to mask missing money without notifying Tether holders. In 2021, after a 22-month-long inquiry, Tether and Bitfinex settled with the regulator, resulting in an $18.5 million fine, a halt to its New York operations, and quarterly transparency filings.

The same year, the US Commodity Futures Trading Commission (CFTC) imposed a $42.5 million fine on Tether for falsely stating that each USD₮ was “100% backed by fiat USD,” even though the stablecoin was backed by other assets as well. As part of the agreement, Tether revised its website to state that each USD₮ is “backed 100% by Tether’s reserves.”

Tether has also been investigated by the Justice Department (DOJ) for hiding the intent of its transactions from banks in its early days.

Why Transparency Has Taken So Long

Over the years, Tether made several attempts to assuage the concerns of both the public and regulators. This includes publishing the Independent Auditors’ Report on the website.

For this, the company utilized the services of the Cayman Islands-based accounting firm MHA Cayman, which provided quarterly attestations of its reserve holdings, but only confirmed that Tether’s reserve report was “correctly stated”. It wasn’t a full audit.

Currently, it relies on monthly attestations from BDO Italia to provide assurance that USDT was backed by the assets claimed by Tether, based on snapshots of reserves at scheduled intervals, but a full financial audit is still lacking.

Tether actually floated audit plans to offer deeper insight into the company’s reserves a number of times over the years, but they have all been unsuccessful.

One of the failed attempts was made in 2017 after retaining Friedman LLP. Then, a few years ago, another situation ended with no such report after Stuart Hoegner, the firm’s then-General Counsel, said in an interview that an audit was “months away, not years.” In the past, Tether even pledged to undergo a Big Four audit but faced hesitation from major accounting firms due to reputational concerns.

“The bottom line is an audit cannot be obtained,” Hoegner had said back in 2018. “The big four firms are anathema to that level of risk,” so they’ve “gone for what we think is the next best thing.”

The current CEO, meanwhile, blamed this in part on Sen. Elizabeth Warren (D-Mass.), who he said warned Big Four firms not to work with the crypto industry, thus delaying the auditing process.

In an interview with Fortune earlier this year, Ardoino said that this is still the goal.

The company actually appointed a new CFO to accelerate the audit process. Tether called the appointment of McWilliams, who has over two decades of experience leading large investment management firms through rigorous audits, “a historic step toward a full financial audit.”

That was last March, and now, a year later, Tether has tapped KPMG, which will conduct a full financial statement audit that goes beyond the current financial reports, requiring a detailed review of assets and liabilities, as well as internal controls and reporting systems.

The pursuit of a full audit more than a decade after the USD₮ launch comes as Tether prepares for a U.S. expansion amid a changing regulatory landscape. It has already launched a compliant dollar-pegged token, USAT, to challenge the Coinbase-backed USDC, following the signing of the GENIUS Act into law, which established the first federal framework for stablecoins in the country.

Moreover, Tether is considering raising $5 billion, but investors are concerned about pricing, transparency, the quality of Tether’s reserves, and illegal activity.

According to a TRM Labs report, about $19.3 billion was linked to illicit activity in 2023, though it accounted for only 1.63% of USDT transaction volume.

Illicit crypto activity continues to rise, hitting a record $154 billion in 2025, according to a report from Chainalysis, and stablecoins account for a large share of these activities. Nation-states like Venezuela and Iran have been found to have used USDT to get around sanctions.

To address these unlawful activities, Tether utilizes tools to detect suspicious transactions and freeze them. Tether is also collaborating with law enforcement agencies to support investigations and assist in the recovery or restriction of illicit funds when necessary.

Back to the $5 billion raise, it is actually a significant reduction from the original target of $15 billion to $20 billion for about 3% of the company, at a $500 billion valuation. Those initial targets, however, have been called a “misconception,” with the $20 billion figure being just a theoretical maximum that the company was “ready to sell.”

Tether has emphasized that it does not need outside capital, with Ardoino pointing out that the company is “extremely profitable” and has “little need for additional capital,” with insiders reluctant to sell shares. And indeed that’s the case.

The Growing Weight of Tether in Financial Markets

For more than a decade, the digital assets industry has sought a foothold in mainstream finance, and with stablecoins, it has found one. Emerging as one of the most transformative use cases, stablecoins now power the majority of all crypto transaction volume.

Total stablecoin transaction volumes, meanwhile, soared 72% to $33 trillion in 2025.

With 33% of global finance leaders already using stablecoins in their business operations, and 86% open to doing so within the next three years, stablecoins are emerging as a highly lucrative segment of the financial industry.

This is evident from Tether’s financials, which, according to a BDO attestation, generated more than $10 billion in net profit last year, a 23% decrease from the $13 billion in 2024.

In its Q4 2025 financial results, Tether also reported adding more than 35 million users, bringing its total users to over 530 million.

“What matters about 2025 is not just the scale of growth, but the structure behind it,” said Ardoino. “USD₮ expanded because global demand for dollars is increasingly moving outside traditional banking rails, particularly in regions where financial systems are slow, fragmented, or inaccessible.”

Tether’s massive profits are driven by its reserves, which were originally held solely in cash and short-term dollar equivalents but were later expanded to include gold and Bitcoin as well. In fact, Tether has accumulated so much gold that it is now among the largest global holders of physical gold, which is stored in a Swiss former nuclear bunker.

According to a report by investment bank Jefferies, Tether was holding about 148 tonnes of gold at the end of January, valued at nearly $23 billion. All this gold not only backs Tether Gold but also serves as collateral for dollar-denominated stablecoin liabilities.

“We are operating at a scale that now places the Tether Gold Investment Fund alongside sovereign gold holders, and that carries real responsibility,” said Ardoino in a statement.

Most of Tether’s reserve holdings, however, consist of super-safe U.S. Treasury bills that can be sold quickly at face value. And much like its dominance in gold, Tether has amassed Treasury bills that surpass those of many large economies, such as Germany and South Korea.

Its cash-like reserves, which include repurchase agreements, bank deposits, and U.S. Treasury bills, actually account for 76% of total assets while Bitcoin, gold, and secured loans make up the rest (24%), as of December 2025.

There has been a 7% increase in Tether’s high-risk assets backing USDT, and as a result, S&P Global Ratings downgraded its reserves late last year from “constrained” to the lowest measure, “weak.”

The agency warned about “limited transparency on reserve management and risk appetite, lack of a robust regulatory framework [and] no asset segregation to protect against the issuer’s insolvency.”

S&P analysts cited no information about custodians, counterparties, and bank account providers. They further pointed out the lack of disclosures about its approach to selecting high-risk assets and handling sharp downturns. A decline in the price of these high-risk assets like BTC, they noted, could “reduce collateral coverage and result in USDT becoming under-collateralised.”

Tether’s Bitcoin holding, in particular, amounts to $6.44 billion (96,184 BTC).

Besides gold and Bitcoin, the company has also been making massive investments across sectors, including media, telecommunications, energy, agriculture, fintech, satellites, AI, and data centers. By pouring hundreds of millions of dollars into the likes of Neura Robotics, Adecoagro, Rumble, Northern Data, and Satellogic, the company aims to replicate Tether’s exponential growth in other areas.

So far, Tether has deployed its vast profits into more than 100 investments, including a stake in Italian football club Juventus.

With these investments, the company is building a “freedom tech stack” that will embed USD₮, the most popular stablecoin, into a wide range of platforms and services to enable seamless, censorship-resistant financial access for users worldwide.

Latest TETHER (USDT) News and Developments

Tether’s Big Audit Moment

While a clear delivery timeline is still lacking, the audit is confirmed to be underway. As the largest stablecoin issuer and a critical pillar of global crypto liquidity, its outcome carries systemic implications. More importantly, this audit is not just about Tether. It is a test of whether the stablecoin model itself can meet the standards of global finance at scale, even as questions around risk appetite, asset composition, and regulatory oversight may not disappear entirely.