BitMEX co-founder Arthur Hayes has warned that Tether dangers balance-sheet insolvency if its Bitcoin and gold reserves undergo a 30% drawdown.
His November 30 submit targets the structural vulnerabilities in Tether’s newest asset allocation. He suggests the agency has tied its solvency to the efficiency of unstable danger belongings somewhat than relying solely on the soundness of presidency debt.
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Hayes Critique Tether’s Gold and Stablecoin Holdings
Hayes’ evaluation attracts on Tether’s third-quarter 2025 attestation, which reveals a big rotation into non-fiat collateral. The report reveals the issuer now holds $12.9 billion in treasured metals and $9.9 billion in Bitcoin.
In line with Hayes, this allocation represents a deliberate “interest rate trade.” His thesis posits that Tether is getting ready for Federal Reserve charge cuts that might compress the yield on its large portfolio of US Treasury payments.
“[Tether] thinks the Fed will cut rates, which crushes their interest income. In response, they are buying gold and BTC that should in theory moon as the price of money falls,” Hayes famous.
Nonetheless, Hayes argues this technique introduces uneven danger to the corporate’s skinny layer of fairness.
Hayes contends that this determine exceeds Tether’s surplus capital, rendering the agency theoretically bancrupt even when it stays operationally liquid.
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He warned that such a state of affairs would probably drive giant holders and exchanges to demand a real-time view of the stability sheet to evaluate the security of the peg. Notably, this warning aligns with S&P World’s determination to assign USDT a ‘5’ score, the bottom on its scale.
Trade Stakeholders Defend Tether
Trade proponents preserve that the insolvency thesis conflates stability sheet accounting with precise liquidity danger.
Tran Hung, CEO of UQUID Card, dismissed the warning as essentially flawed.
He famous that the overwhelming majority of Tether’s $181.2 billion stability sheet stays parked in extremely liquid, low-risk devices. Certainly, the attestation confirms Tether holds $112.4 billion in US Treasury Payments and practically $21 billion in repo agreements.
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Tether USDT Stablecoin Reserves. Supply: Tether
Hung argues these “Cash and Cash Equivalents” present a liquidity wall adequate to cowl the overwhelming majority of USDT in circulation.
Contemplating this, he argued that Tether would stay absolutely redeemable even when a market downturn eradicated its company fairness buffer.
“Tether has consistently demonstrated strong redemption capacity, including $25 billion redeemed in just 20 days during the 2022 market crisis (FTX crisis), one of the largest liquidity ‘stress tests’ in financial history,” Hung famous.
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In the meantime, Cory Klippsten, CEO of Swan Bitcoin, identified that Tether’s leverage is more aggressive than that of conventional monetary establishments.
Tether is operating about 26x leverage with a 3.7% fairness cushion. About three quarters of belongings are short-term sovereign and repo; one quarter is a mixture of BTC, gold, loans, and opaque investments,” Klippsten mentioned.
In line with him, a 4% portfolio loss would erase the frequent fairness, whereas A 16% drop within the riskiest belongings would have the identical impact.
Nonetheless, regardless of the structural leverage, he suggests the danger is mitigated by Tether’s sheer profitability. Certainly, the stablecoin issuer is on monitor to file a revenue of greater than $15 billion this 12 months.
Furthermore, Klippsten additionally famous that Tether’s homeowners lately withdrew a $12 billion dividend. Contemplating this, he argued they’ve the capability to recapitalize the agency instantly if its buffer have been ever breached.
