Tether’s Massive Gold Reserve Strategy Sparks Industry Debate

USDT stablecoin issuer Tether is making major changes to how it manages its reserves, and the shift is already stirring debate across the crypto industry.

BitMEX co-founder Arthur Hayes says Tether is preparing for a future Federal Reserve rate-cut cycle by increasing its exposure to Bitcoin (BTC) and gold. While he sees the move as a clear response to changing economic conditions, he also warned that it carries serious risks.

Tether Leans Toward Bitcoin and Gold

In a recent X post, Arthur Hayes drew attention to Tether’s latest attestation, which shows less focus on returns from U.S. Treasuries. He said the company is now leaning more toward alternative assets.

He believes the company is positioning itself for a world where interest rates fall and traditional yields become less attractive. However, Hayes cautioned that this strategy is not without danger

If Bitcoin or gold prices fall sharply, Tether’s equity buffer could come under stress. Such a scenario, he said, might revive long-standing debates about the strength of USDT’s backing

Tether Disputes S&P’s “Weak” Rating Amid Strong Growth Claims

Tether’s newest report lists total assets of about $181 billion. Most of the reserves are held in cash, Treasury bills, repo agreements, and money market instruments, with significant portions also in alternative assets

Most recently, S&P Global Ratings reviewed this structure and issued a “weak” stability score. The agency flagged the increasing exposure to volatile assets. It warned that this mix could cause undercollateralization during periods of severe market stress

This downgrade triggered quick reactions across the industry. Reportedly, Tether CEO Paolo Ardoino dismissed S&P’s downgrade. He argued that traditional rating agencies have a long history of misjudging financial risks. This includes firms that later collapsed.

Ardoino insisted that Tether holds no toxic assets, describing the company as both overcapitalized and profitable. He added that the rapid growth of USDT and adoption reflects rising global demand for financial systems outside traditional banking.

Analyst Questions S&P’s View of Tether

Former Citi analyst Joseph also commented on the S&P analysis on X, arguing that the company did not consider the full picture. He explained that Tether’s public disclosures only cover assets directly backing USDT

A separate corporate balance sheet holds equity stakes, mining operations, company reserves, and additional Bitcoin. These assets do not appear in the attestation reports.

For this reason, analyst Joseph believes the true risk profile is different from what S&P suggests. Furthermore, Joseph pointed out that Tether is highly profitable. Its treasury holdings, worth around $120 billion, have earned almost $10 billion a year since 2023

Joseph highlighted that most commercial banks survive because central banks provide emergency support when needed. Tether, on the other hand, operates without any lender of last resort. Strong profits and high returns, he said, help the company compensate for this lack of protection.

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