Tether to Undergo Audit as U.S. Prepares New Stablecoin Regulations
Tether to Undergo Audit as U.S. Moves Toward Stablecoin Regulations
Tether, the company behind the world’s largest stablecoin, is reportedly in discussions with one of the Big Four accounting firms for a third-party audit. This move comes as the U.S. government prepares to introduce new regulations that will require stablecoin issuers to provide verified proof of their financial reserves. The potential audit is seen as a crucial step for Tether to maintain credibility and ensure compliance with these upcoming laws.
Why is Tether Seeking an Audit?
Tether’s CEO, Paolo Ardoino, has confirmed that securing an audit is now one of the company’s top priorities. The push for transparency is largely driven by growing interest from U.S. regulators in integrating stablecoins into the broader financial system.
Recently, former President Donald Trump made statements highlighting stablecoins as a tool that could help strengthen the U.S. dollar’s role in the global economy. With such high-level political attention, Tether is under pressure to prove that its stablecoin, USDT, is fully backed by real financial assets. A credible third-party audit could help boost confidence among regulators, financial institutions, and investors.
Skepticism and Tether’s History with Audits
Despite these recent efforts, many in the crypto community remain skeptical about Tether’s intentions. The company has made similar promises in the past but has never completed a full, independent audit. Instead, Tether has relied on internal reports and periodic attestations of its reserves, which critics argue fall short of true transparency.
In previous years, Tether has faced legal challenges over its financial disclosures. In 2021, the company reached a settlement with the New York Attorney General’s office over misleading statements about its reserves. Since then, Tether has been publishing reports more regularly, but without the rigorous examination that comes with a full external audit.
The Impact of the GENIUS Act on Stablecoin Issuers
A major factor driving Tether’s audit discussions is the proposed GENIUS Act, a new bill that could impose strict regulations on stablecoin issuers operating in the U.S. If passed, the act would require companies like Tether to:
- Undergo independent third-party audits
- Hold their reserves in secure financial assets such as U.S. Treasury bonds
- Provide regular, transparent reports about their holdings
These measures are designed to protect investors and ensure that stablecoins are backed by reliable assets rather than being used to manipulate markets or engage in risky financial practices.
Tether claims it already meets many of these requirements, stating that a significant portion of its reserves—reportedly $33 billion—are held in U.S. Treasury bonds. However, critics argue that simply claiming to hold these assets is not enough. A verified audit would be necessary to prove that Tether’s reserves match the amount of USDT tokens in circulation.
Concerns Over Tether’s Financial Ties
Another source of concern is Tether’s close financial relationship with Cantor Fitzgerald, the firm that reportedly manages much of Tether’s U.S. Treasury holdings.
What has raised eyebrows is the fact that Howard Lutnick, the former CEO of Cantor Fitzgerald, recently became the U.S. Secretary of Commerce. Some analysts and investors worry that this connection could lead to conflicts of interest, or at the very least, create an impression that Tether is receiving favorable treatment.
Critics like venture capitalist Jason Calacanis have been vocal about the need for stronger oversight, arguing that Tether should not be allowed to hold U.S. Treasuries until it has undergone a full, independent audit. Without this transparency, concerns will continue to grow about whether all USDT tokens are truly backed by real assets.
Tether’s Financial Strength and Market Influence
Tether has made significant profits over the past year, thanks in part to the interest it earns on its massive holdings of U.S. Treasury bonds. In 2023, the company reported billions in earnings, demonstrating its strong financial position.
With such profitability, some wonder why Tether has not yet undergone an audit. If it has nothing to hide, critics argue, a full audit would silence doubts and reinforce its legitimacy in the market.
At the same time, Tether remains the dominant player in the stablecoin market, with a circulating supply exceeding $90 billion. Its influence in the cryptocurrency sector is undeniable, as USDT is widely used in trading, payments, and cross-border transactions.
What Happens Next?
As stablecoin regulations move forward, all eyes are on Tether to see if it will follow through with its promise of an audit. A successful audit could solidify its position as a leader in the stablecoin industry, opening doors to potential partnerships with U.S. financial institutions and regulatory approval for wider adoption.
However, if Tether continues to delay or opts for a limited review of its reserves instead of a full audit, it may face significant regulatory hurdles. Without compliance, its ability to operate in the U.S. market could be at risk, potentially giving competitors like USDC (issued by Circle) an advantage in securing regulatory approval.
In the coming months, Tether will need to make a decisive move—either to fully embrace transparency or to risk losing credibility in a rapidly evolving regulatory environment. The crypto community, investors, and regulators will be watching closely to see if Tether finally delivers on its long-promised audit and proves that USDT is truly backed by the assets it claims.