In the world of stablecoins, no name is more controversial than Tether – the company behind USDT, with a market cap of over ~$120 billion, accounting for the majority of liquidity in the entire crypto industry. USDT is the most important instrument for trading, pricing, and transferring value in this ecosystem.
If anything happens to USDT, the entire crypto market would suffer a cascading shock. That’s why any accusation, analysis, or warning related to Tether always draws special attention.
Recently, Arthur Hayes, former CEO of BitMEX – one of the most influential voices in the market – warned that Tether could become insolvent if Bitcoin and gold fall sharply, due to the amount of volatile assets they are currently holding.
This has ignited debate across the community:
- One side believes this is just FUD, repeating the same narrative that has existed for 10 years.
- The other side is genuinely concerned that Tether’s current system is hiding major risks.
But this time is different from the past: the latest data in Tether’s reserve reports and newly revealed information about the group’s assets show that the story is far more complex.
This article offers the most complete and in-depth analysis of each aspect.
1. Tether’s latest reserve report: strong on the surface, but the internal structure is more complex
The starting point of every debate about Tether is always its reserve report. Every quarter, Tether publishes an attestation verified by BDO. The important thing to understand is:
- An attestation is not a full audit.
- It is more like a snapshot at a given moment: “On day X, the company had Y assets and Z liabilities.”
It does not answer deeper questions such as: cash flow quality, internal transactions, multi-year asset risks, subsidiary exposure, etc.
Even so, this is still the rare piece of official data the market has about Tether.
In the latest report, the overall picture looks impressive:
- Total assets: ~$181 billion
- Liabilities (USDT in circulation): ~$174 billion
- Excess reserves (equity buffer): ~$6–7 billion
If you look at these numbers alone, a few positive conclusions can be drawn:
– Tether holds more assets than USDT liabilities → in theory, each USDT is sufficiently backed – A ~$6–7 billion buffer exists → moderate losses could be absorbed without affecting redemption ability – Most assets are categorized as safe, short-term, and highly liquid → appropriate for a stablecoin
However, looking only at the totals is not enough. In finance, the composition of the assets matters just as much as the size. Two companies may each have $100 billion: one in T-Bills and cash, the other in junk stocks and small-cap crypto — completely different risk profiles.
The same applies to Tether: to understand whether they are safe or not, you must dig into the internal structure.
1.1. The “super safe” portion of assets (~75–80%) – the reason Tether survives every crash
When analyzing the reserve breakdown, we can see a “core block” of assets making up about 75–80% of total reserves, including:
- U.S. Treasury Bills (largest component)
- Repo & reverse repo agreements backed by T-Bills
- Money market funds (primarily invested in T-Bills)
- Cash & bank deposits
This group of assets has three crucial characteristics:
1. Very high liquidity
T-Bills and money market funds can be sold or converted into cash almost immediately in global financial markets.
This allows Tether to meet large USDT → USD redemption waves quickly without liquidating risky assets.
2. Extremely low credit risk
Short-term U.S. government bonds are considered one of the safest credit assets on the planet.
The repo and money market structures Tether uses are collateralized by T-Bills, meaning default risk is extremely low.
3. Stable valuation, minimal daily volatility
Unlike stocks or crypto, short-term T-Bills seldom experience large price swings in the short term.
This prevents Tether’s balance sheet from fluctuating wildly with day-to-day market movements.
This “core block” explains why:
- During the Terra–Luna collapse (2022), billions of USDT were redeemed within days — USDT briefly depegged but quickly recovered.
- When FTX went bankrupt, panic surged, people rushed out of exchanges, yet Tether still processed redemptions.
- During the 2023 U.S. banking crisis, capital flowed into stablecoins and T-Bills — indirectly boosting Tether’s earnings from high interest rates.
Some analysts even noted:
“Tether’s safe-asset structure is more conservative than many mid-sized commercial banks, which often hold riskier loans.”
In other words, if you look only at the super-safe portion, Tether looks extremely strong:
They resemble a massive T-Bill fund issuing stablecoins backed by U.S. treasuries and earning yield.
The interest income from these safe assets alone generates billions of dollars in annual profit, adding to Tether’s financial buffer.
But the story doesn’t end there.
We’ve now seen the “pretty” part — the solid foundation.
Which leads to the next question:
If everything looks so safe, why are people still worried about Tether collapsing?
The answer lies in the remaining portion of the reserves — especially gold, Bitcoin, and other investments, where the risks and controversies begin.
2. The risky zone: Bitcoin, gold, and “other investments” – the issue Arthur Hayes is targeting
According to Tether’s reserve breakdown, the company holds:
- Gold: ~$13 billion
- Bitcoin: ~$10 billion
- Other investments: ~$4 billion
Total: ~$25–27 billion in volatile assets.
This is a very large number.
2.1. Bitcoin – the most volatile asset on the planet
Bitcoin can rise 20% in one week — and can also drop 20% in a single day.
Tether holding ~$10 billion worth of BTC raises several questions:
- Why is a stablecoin investing in high-risk assets?
- What happens if the market experiences a severe dump?
- Given that USDT is the pillar of liquidity, does this create systemic risk?
Tether claims:
Bitcoin was purchased using profits, not the funds backing USDT.
This may be true — but it doesn’t change the reality: BTC is still extremely volatile → which directly affects the strength of Tether’s capital buffer.
2.2. Gold – more stable than BTC, but still prone to big swings
Gold is less risky than Bitcoin, but it can still drop 10–15% when the Fed shifts policy.
Tether holding ~$13 billion in gold is unusual for a stablecoin — but it fits their strategy if the goal is to diversify income sources.
2.3. “Other investments” – the opaque area with no public disclosure
The ~$4 billion “other investments” category is widely considered the least transparent:
- Equity in startups
- Investments in AI companies
- Bitcoin mining operations
- Infrastructure projects
- Subsidiaries within the Tether group
No detailed breakdown is provided.
→ This is exactly the area analysts are most suspicious about.
3. Arthur Hayes’ argument: “A 30% drop would wipe out the entire buffer”
Hayes presents a very simple calculation:
- BTC + gold = ~$25–27 billion
- If these assets drop 30% → loss of ~$7–8 billion
- Meanwhile, Tether’s equity buffer is only ~$6–7 billion
This leads to the conclusion:
=> If the market experiences a sudden deep crash, Tether’s backing could go negative.
Hayes calls this “a massive interest-rate bet”: Tether expects the Fed to cut rates → yields on Treasuries will fall → forcing them to seek alternative profit sources such as Bitcoin and gold.
Hayes’ message:
“Tether is betting on Bitcoin and gold as part of its profit strategy. If the bet goes wrong → USDT faces real risk.”
The media immediately amplified this argument, pushing the debate into the spotlight.
4. But here is the crucial truth: the reserve report does NOT reflect the full assets of the Tether Group
This is the KEY MISSING PIECE.
– The attestation report ONLY reflects Tether International (El Salvador) → the legal entity responsible for issuing & redeeming USDT.
– It does NOT include the rest of the Tether Group => where massive additional assets are held.
According to disclosures reported by Yahoo Finance:
- Tether Group has ~$30 billion in shareholder equity,
- plus a multi-billion-dollar contingency reserve.
This means:
- Tether does not only have a $6–7 billion capital buffer
- It also has around $30 billion in equity held outside the attestation report
This is extremely important because:
=> If the buffer is wiped out (e.g., BTC/Gold drop), the parent group can simply recapitalize it. => The Tether Group is far stronger than what the reserve report alone suggests.
This also explains why:
- Tether has never become insolvent
- Even when tens of billions of USDT were redeemed within days
- Even through multiple catastrophic market crashes
5. Supportive viewpoint: the risks are real, but Tether is far stronger than people think
Here are the reasons many experts believe Arthur Hayes is exaggerating the danger:
5.1. Tether earns enormous profits (far more than many banks)
Because Tether holds ~$100+ billion in U.S. T-Bills, it benefits massively from high interest rates. Estimates show they earn around $10 billion per year, comparable to mid-sized U.S. banks.
This profit is sufficient to:
- Cover any temporary losses
- Continue growing their capital buffer
- Invest in BTC, gold, and other ventures without affecting USDT backing
5.2. Tether has never refused a redeem request (USDT → USD)
Across every crisis:
- 2018
- Covid 2020
- Terra/Luna 2022
- FTX collapse 2022
- U.S. bank shutdowns 2023
USDT sometimes depegged briefly but always returned to peg quickly. Tether has always honored redemptions.
This is the most important evidence of true liquidity strength.
5.3. The parent group has ~$30 billion in shareholder equity
This means:
- If the subsidiary suffers paper losses, the parent can recapitalize it
- The group’s capital far exceeds the published reserve buffer
- This is why institutions trust USDT despite the lack of full audits
5.4. Safe assets still make up 75–80%
Despite the large risky portion, the majority of reserves remain ultra-safe. This is what fundamentally protects USDT.
6. Concerned viewpoint: Tether still carries meaningful risk — a stablecoin should not hold so many volatile assets
Even with the positives, the concerns are valid.
6.1. No full audit
Tether has promised a full audit many times but never delivered one.
Attestation ≠ Audit. Attestation only confirms: “At moment X, the company held Y assets.”
It does not reveal:
- Transaction history
- Governance quality
- Subsidiary risk
- Cash flow details
- Long-term investments
6.2. The scale of risky assets is extremely large
~$25–27 billion in BTC, gold, and other investments is massive:
- Larger than the GDP of some countries
- Larger than the market cap of many altcoins
- Large enough to create significant market waves if Tether is forced to sell
This leads some experts to ask: “Is Tether a stablecoin, or an investment fund disguised as one?”
6.3. Lack of transparency around the $30B in group assets
Tether Group claims large asset holdings, but:
- No detailed reports
- No risk breakdown
- No clarity on cash flow
- No allocation disclosures
This makes it difficult for outsiders to assess the full picture.
6.4. Psychological risk (market psychology)
Even if Tether has the money, strong FUD alone can trigger:
- Tens of billions withdrawn
- Exchange liquidity shortages
- DeFi instability
- USDT depegging
- Forced BTC/Gold selling to meet redemptions
Crypto markets are often driven by emotion more than numbers.
7. The Genius Act could force Tether into full transparency — the biggest turning point ever
The Genius Act is a proposed U.S. bill requiring:
- Mandatory full audits for stablecoins
- Disclosure of all group-wide assets
- Automated monitoring of capital
- Regulation as systemically important financial entities
If the bill passes:
=> Tether would have to reveal its entire financial structure — something the community has awaited for a decade.
The bill could:
- Prove Tether is extremely strong or
- Expose weaknesses the market has never seen
Either way, it would fundamentally reshape the future of stablecoins.
Conclusion: Is Tether dangerous?
Short term: NO – Tether shows no signs of insolvency
They have:
- A massive amount of safe assets
- Enormous profits
- A proven history of strong liquidity
- Very strong group-level equity
Medium term: SOME RISK – BTC and gold introduce buffer volatility
If the market experiences a deep crash, the capital buffer could be impacted.
Long term: TETHER MUST BECOME MORE TRANSPARENT
The lack of a full audit is the biggest risk. The $30B group-level assets are still a black box.
The most balanced assessment:
Tether is not a ticking time bomb — but it clearly carries risks that must be monitored. USDT is currently safe, but it is not without weaknesses.
Disclaimer:The information provided here is for informational purposes only and should not be considered financial, investment, legal, or professional advice. Always conduct your own research, consider your financial situation, and, if necessary, consult with a licensed professional before making any decisions.
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