Tether Solvency Fears Are Misplaced as Company Holds Big Surplus, Says CoinShares

• CoinShares says fears about Tether’s solvency are misplaced.
• Tether has $181B in reserves and $174.45B in liabilities, leaving a $6.8B surplus.
• Arthur Hayes warned that falling Bitcoin and gold prices could hurt Tether.
• S&P Global also raised concerns about Tether’s asset quality.
• CoinShares argues the data shows no real systemic risk right now.
• Tether remains highly profitable, earning $10B in three quarters.

New fears about Tether’s financial stability resurfaced this week after BitMEX founder Arthur Hayes suggested the world’s largest stablecoin issuer could face major problems if the value of its reserve assets dropped sharply. But according to James Butterfill, head of research at CoinShares, these worries are not supported by the data.

In a Dec. 5 market update, Butterfill said concerns about Tether’s solvency “look misplaced.” He pointed to Tether’s most recent attestation report, which shows $181 billion in reserves compared to $174.45 billion in liabilities. This means Tether currently has a surplus of about $6.8 billion, providing a strong financial cushion.

Butterfill explained that while risks in the stablecoin market should always be taken seriously, the numbers do not show any signs of a major weakness or a threat to the stability of Tether’s USDT. Instead, the data indicates that the company is operating with more assets than it owes—something not all stablecoin issuers can claim.

Tether is also one of the most profitable companies in the crypto industry. In the first three quarters of the year alone, the company generated $10 billion in profit, an extremely high figure given the relatively small size of its team. This profit comes mostly from interest earnings on U.S. Treasury holdings.

Where the new concerns came from

The latest round of Tether fear appears to have started after comments from Arthur Hayes. Hayes said Tether was “in the early innings of running a massive interest-rate trade,” and argued that a 30% drop in Tether’s Bitcoin and gold holdings could erase the company’s equity and leave USDT “technically insolvent.”

Bitcoin and gold now make up a growing part of Tether’s reserves, so Hayes believes the company is taking on more risk than before. He pointed out that large price drops in these assets could create trouble for Tether if they hit all at once.

But CoinShares pushed back on this view, saying that Tether’s current surplus provides a significant buffer against market volatility.

Even more criticism from S&P Global

Tether is also facing criticism from traditional finance. S&P Global recently downgraded the company’s ability to defend its $1 peg. The ratings agency said Tether holds “higher-risk” assets, including gold, Bitcoin, and various loans, which could make it harder to maintain price stability during extreme market stress.

Tether CEO Paolo Ardoino responded quickly, dismissing the downgrade as more “Tether FUD.” He pointed to the company’s strong surplus and said the latest attestation clearly proves the company remains stable and well-capitalized.

Tether still dominates the stablecoin market

Despite the criticism, Tether’s USDT remains the largest stablecoin in the world. According to market data, USDT has $185.5 billion in circulation and holds nearly 59% of the entire stablecoin market. This dominance shows that demand for USDT remains strong even as new questions about its reserves continue to appear.

Butterfill’s message is that while the market should stay watchful, the current financial data does not support the idea that Tether is close to insolvency.

Final Thought

Although critics continue to raise concerns about Tether’s reserve assets, the latest data shows a multibillion-dollar surplus and strong profits. CoinShares argues that the numbers simply don’t match the fears. For now, Tether remains stable, profitable, and firmly in control of the stablecoin market.