Concerns have resurfaced regarding Tether’s financial health this week, prompted by warnings from BitMEX founder, Arthur Hayes. He suggested the company might encounter severe difficulties if its reserve assets decline in value. However, CoinShares’ James Butterfill defended Tether, stating these fears appear to be unfounded.
In a market update on December 5, Butterfill highlighted that Tether’s latest report shows reserves of $181 billion compared to approximately $174.45 billion in liabilities, resulting in a surplus of nearly $6.8 billion. He stressed that while risks associated with stablecoins should not be overlooked, the current data does not reveal any significant vulnerability.
Tether continues to be among the most profitable companies in the sector, with a profit of $10 billion in the first three quarters of the year—an unusually high figure per employee.
The Latest Source of Tether Anxiety
Speculation surrounding Tether’s financial stability is not new; media outlets have scrutinized its reserves and asset backing for years. The latest concerns seem to originate from Arthur Hayes, who recently stated that Tether might be “in the early innings of running a massive interest-rate trade” and warned that a 30% drop in Bitcoin and gold values could render USDt technically insolvent.
Both Bitcoin and gold represent a major portion of Tether’s reserves, and the company has recently increased its gold holdings.
Moreover, Tether faces criticism from other sources as well. CEO Paolo Ardoino recently opposed S&P Global’s downgrade of USDt’s ability to maintain its US dollar peg, labeling the rating as “Tether FUD” (fear, uncertainty, and doubt) and cited the company’s third-quarter attestation report to support his claims.
S&P Global downgraded Tether due to apprehensions regarding its exposure to higher-risk assets like gold, loans, and Bitcoin.
Currently, Tether’s USDt remains the largest stablecoin in the cryptocurrency market, with $185.5 billion in circulation and a nearly 59% market share, according to CoinMarketCap.
