Fresh concerns about Tether’s financial health surfaced this week after comments from BitMEX co-founder Arthur Hayes suggested the stablecoin issuer could face serious pressure if the value of key reserve assets were to fall. Tether, which issues the market-leading USDT stablecoin, has faced repeated scrutiny over the composition and transparency of its reserve holdings. Hayes reignited the debate by arguing that the company is increasingly exposed to volatile positions that could undermine its ability to maintain a 1:1 dollar peg. Hayes Says Decline in Bitcoin and Gold Could “Wipe Out” Equity Buffer In recent commentary, Hayes said Tether is “in the early innings of running a massive interest-rate trade.” He warned that a 30% decline in the value of the company’s Bitcoin and gold holdings could eliminate its equity cushion. Tether has significantly expanded its exposure to gold over the past several years, alongside an increase in Bitcoin holdings. Hayes argued that while Tether currently earns substantial income from interest-bearing assets, this strategy increases vulnerability if markets turn sharply lower. He concluded that in a severe downturn, USDT could become “technically insolvent.” CoinShares Research Head Pushes Back James Butterfill, head of research at digital-asset firm CoinShares, disputed Hayes’s analysis in a market update issued on Dec. 5. He said concerns about Tether’s solvency “look misplaced,” pointing to the company’s latest attestation covering the third quarter of 2025. According to that report, Tether held $181 billion in total reserves against approximately $174.45 billion in liabilities. This left a surplus of nearly $6.8 billion. Butterfill argued that the data show no immediate systemic risk, although he emphasised that stablecoin issuers should always be monitored cautiously due to their role in broader market liquidity. Ongoing Debate Over Reserve Quality Tether remains one of the cryptocurrency sector’s most profitable companies. It generated an estimated $10 billion in profit during the first three quarters of 2025 — an unusually high figure considering its relatively small workforce. However, the firm continues to face criticism regarding the composition of its reserves. S&P Global recently downgraded USDT’s ability to defend its dollar peg , citing exposure to “higher-risk” assets such as gold, loans and Bitcoin. Tether CEO Paolo Ardoino dismissed the downgrade as “Tether FUD,” arguing that the company’s financial statements show its position remains strong. He pointed to the firm’s attestation as evidence of adequate liquidity and responsible asset management. Market Position Remains Dominant Despite recurring concerns, USDT continues to be the largest stablecoin in the world. The token has approximately $185.5 billion in circulation. It also controls nearly 59% of the global stablecoin market. Tether maintains a substantial allocation to U.S. Treasuries — estimated at more than $130 billion — which remains its most stable reserve component. However, the increasing share of Bitcoin and gold exposes the company to greater price swings, keeping the debate alive among analysts and regulators. The long-running dispute over Tether’s reserve practices is unlikely to subside soon, particularly as stablecoins continue to serve as a key pillar of global cryptocurrency trading.
