Arthur Hayes Sparks Tether Solvency Debate, CoinShares and S&P Global Weigh In

BitMEX founder Arthur Hayes has ignited fresh concerns over the financial stability of Tether, the issuer of the world's largest stablecoin, USDT. In recent commentary, Hayes warned that Tether is effectively running a "massive interest-rate trade" and argued that a 30% decline in the value of its Bitcoin and gold reserves could "wipe out their equity," potentially rendering USDT technically insolvent.

The warning revived long-standing debates about the transparency and risk profile of Tether's reserves, which back its $185.5 billion stablecoin. However, the claims were swiftly countered by industry analysts. James Butterfill, head of research at CoinShares, stated in a December 5 market update that solvency fears "look misplaced." He pointed to Tether's most recent attestation report, which shows $181 billion in assets against approximately $174.45 billion in liabilities, leaving a surplus of $6.8 billion. "Although stablecoin risks should never be dismissed outright, the current data do not indicate systemic vulnerability," Butterfill wrote.

The scrutiny extends beyond Hayes. Credit rating agency S&P Global recently downgraded its assessment of USDT's ability to maintain its 1:1 dollar peg, citing exposure to "higher-risk" assets like gold, loans, and Bitcoin within Tether's reserves. Tether CEO Paolo Ardoino dismissed the downgrade as "Tether FUD," pointing to the firm's strong third-quarter attestation and its status as one of the crypto sector's most profitable entities, having generated nearly $10 billion in the first nine months of the year.

The core of the debate hinges on the composition of Tether's reserves. While the company reports a significant surplus, critics argue that the inclusion of volatile assets like Bitcoin and gold introduces market risk to the balance sheet underpinning the dominant stablecoin. Tether maintains that its holdings of short-term U.S. Treasuries and its overall reserve structure provide more than sufficient backing. Despite the controversy, USDT maintains a commanding 59% share of the global stablecoin market, underscoring its systemic importance to crypto trading and liquidity.