Key Takeaways
- •CoinShares research dismisses recent fears about Tether’s insolvency, citing its robust reserve backing.
- •Recent attestation reports reveal a reserve surplus of approximately $6.8 billion against liabilities of $174.45 billion.
- •Tether remains highly profitable, generating around $10 billion in the first three quarters of the year.
- •Criticism from notable industry figures, including Arthur Hayes, has prompted further discussion of reserve adequacy and risk exposure.
Industry Insiders Push Back on Solvency Concerns
Concerns about Tether’s financial stability re-emerged following commentary from Arthur Hayes, the co-founder of BitMEX. Hayes suggested that Tether could face severe issues if a significant decline in its holdings of Bitcoin and gold materialized, potentially rendering its USDT stablecoin insolvent.
In a Dec. 5 market update, James Butterfill, Head of Research at CoinShares, countered these claims. He emphasized that Tether’s latest attestation indicates a reserve of $181 billion—surpassing liabilities by nearly $6.8 billion. “Although stablecoin risks should never be dismissed outright, the current data do not indicate systemic vulnerability,” Butterfill stated.
Tether’s profitability also demonstrates its resilience. The company posted a profit of $10 billion in the first three quarters alone, a figure that underscores its operational strength, even amid market turbulence.
Hayes’ warnings are part of a broader pattern of skepticism in the crypto space, which has been probing Tether’s backing and reserve composition for years. However, Tether’s leadership remains assertive. CEO Paolo Ardoino dismissed recent downgrades from S&P Global, which cited concerns over exposure to high-risk assets like gold, loans, and Bitcoin, as “Tether FUD.” He pointed to the third-quarter attestation as evidence of their backing.
Despite some criticism, Tether’s market dominance persists. According to CoinMarketCap, the stablecoin remains the largest in the market, with approximately $185.5 billion in circulation—accounting for nearly 59% of the stablecoin market share.