In a strategic pivot, Tether, the issuer of the USDT stablecoin, has significantly reduced its exposure to U.S. Treasuries while increasing allocations to Bitcoin and gold. This move aligns with expectations of the Federal Reserve's next interest rate cuts and reflects a broader shift towards assets perceived as durable and independent from traditional financial systems.
According to analysis by BitMEX founder Arthur Hayes, Tether's latest reserve update shows a clear departure from government debt, with deeper investments in BTC and gold. The Standard & Poor's (S&P) Global agency responded by downgrading USDT's rating to "vulnerable," citing increased exposure to volatile assets: Bitcoin now constitutes 5.6% of reserves (above the 3.9% margin), and gold, loans, and corporate bonds have risen to 24% from 17% in 2024.
Tether CEO Paolo Ardoino countered these concerns by highlighting Q3 2025 attestation data, which reveals $215 billion in total assets against $184.5 billion in stablecoin liabilities. Ardoino emphasized that the Tether Group holds nearly $30 billion in equity—comprising $7 billion in excess reserves and $23 billion in retained earnings—acting as a buffer during market downturns. He argued that critics, including S&P, overlooked this equity cushion.
Analysts like Joseph Ayoub, a former Citi analyst, support Tether's position, noting the firm's strong income and robust reserves. However, warnings persist that if Bitcoin or gold fell by 30-40%, Tether's equity buffer could evaporate, potentially leading to insolvency and market panic. Crypto analyst Ted Pillows added that USDT is backed by a diverse portfolio including U.S. Treasuries and yield-generating assets, operating on a fractional-reserve model similar to traditional banks.
With Tether's stablecoin market cap at approximately $174 billion, this reserve repositioning could influence liquidity and investor confidence across the cryptocurrency market.
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