30th March 2026 > > Tether & USDT.

tl;dr

A warning about Tether and USDT.

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Curious Cryptos’ Commentary – USDT (USD Tether)

Tether is the company behind the most successful stablecoin, USDT. With a headcount of between 100 and 150 people, and 2023 net profit declared at $6.2bn, that’s a profit per employee of $40mm to $60mm. Extraordinary. My best year working in the City I made over $20mm for the bank, but that was a one-off unfortunately. Tether just keeps on doing its thing.

So, what exactly is its thing?

Not quite what it should be, if you ask me.

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Collateral backed stablecoins – as opposed to algorithmic stablecoins such as those at the heart of the Ethena and Sky ecosystems which are destined to implode at some indeterminate point in the future – exchange the fiat received into assets held as collateral against the liability created by issuing the stablecoin.

The GENIUS Act of 2025 specified that those assets must be held in cash or cash-like equivalents, such as short-term money market funds, in secure, regulatory approved custodians. Quite right too. That prevents the equivalent of a bank-run in the digital world on the stablecoin, ensuring that the peg to the USD remains intact, within a very small range of variation. Taking USDC as an example CoinMarketCap shows this historical relationship to dirty fiat USD:

I concede that in March 2023 it did lose 1% of value against the dirty dollar, and in March 2020 nearly 3%. The latter move was a response to the government induced panic about Covid that took the S&P down by a third or more, and BTC down by roughly 50%. The March 2023 drop was caused the government induced closure of Silicon Valley Bank which held a decent chunk of Circle’s (the issuer of USDC) reserves.

Absent those two artificially created events, USDC can be relied upon to maintain its peg.

The same cannot be said about USDT.

And this matters, for USDC’s market cap is nearly $80bn whilst USDT’s is $184bn. With a total market cap of $310bn or so for all USD stablecoins, USDT retains, inexplicably, its gorilla status in the room.

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Let us start with the name, though this might sound tangential to you.

I have long been a believer that names are often decided upon to fool us, that names are used in direct opposition to the purpose to which they have been allocated. An obvious example is the newspaper in the UK known as “The Independent”. It is clearly a vehicle for some extreme political views. Only someone who is spectacularly unobservant would believe in its name, but there it is.

The same with Tether.

It is true that since 2021 USDT has been closely aligned with dirty fiat USD, and for that – given its pre-eminence in the stablecoin world – we must be grateful. But it is not “tethered” to the dollar.

Long-term readers will recall that many years ago the CCC called Tether out over the collateral backing USDT. Some of that collateral, unbelievable though this may sound, was in loans made to Chinese companies involved in cryptos. Anyone familiar with the basic requirements of the needs of collateral knows that correlation risk is the very worst risk to have in your portfolio. And there it was, loud and proud, in Tether’s reserves. Having said that, fair dues to Tether, for shortly after that critique from the CCC, Tether sold those loans for cash helping to restore some semblance of sanity to its balance sheet.

But only some.

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USDT does not – and will never – receive regulatory approval under the GENIUS Act, at least not under the current senior management, who are each individually accruing billions of dollars every year into their personal bank accounts.

I have no problem with that in principle (I wish it were my bank account) but I have a problem with the way they are doing it.

Having jettisoned the dodgy crypto-related loans from Chinese companies who work for the government of that poor, benighted country (https://www.curiouscryptos.com/post/27th-february-2025-interregnum-1-1-1-1-1) Tether has become one of the biggest buyers of physical gold with its pace of acquisition outstripping many sovereign countries, a key factor in the recent ramp up in the price of gold.

But here’s the thing – Tether should not own any gold at all. Nor should it have BTC on its balance sheet. It should have aligned itself with the GENIUS Act by owning only cash or cash-like securities denominated in USD. Make no mistake, management at Tether are taking unnecessary risks with the collateral and that should worry us all.

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Here is another frightening fact about Tether – though it claims to have $192 billion in assets, those holdings have never been audited, with little detailed information about the assets. A week ago, the company claimed to have employed a Big Four accounting firm to “complete its first full independent financial statement audit” but hasn’t stated which one and again has given no further details.

What is the company trying to hide?

I urge all readers to do everyone a favour and use USDC instead of USDT. The broader crypto market will thank you for doing so.

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For reasons of disclosure the CCC Treasury share portfolio has significant exposure to Coinbase, a key collaborator in the USDC ecosystem, for reasons not entirely unconnected to the information above.