CoinShares says Tether solvency fears misplaced amid surplus
Concerns about the financial position of stablecoin issuer Tether resurfaced this week following a warning from BitMEX co-founder Arthur Hayes, but CoinShares’ head of research James Butterfill said the apprehension is unfounded. In a Dec. 5 market update, Butterfill said worries over Tether’s solvency “look misplaced,” citing the company’s most recent attestation.
According to that attestation, Tether reported $181 billion in reserves against roughly $174.45 billion in liabilities, implying a surplus of nearly $6.8 billion. Butterfill added that while risks tied to stablecoins should not be ignored, current figures do not indicate broader systemic issues.
Tether also remains highly profitable, generating $10 billion in the first three quarters of the year, an unusually large amount on a per-employee basis.
Recent drivers of Tether scrutiny
The latest round of questions over Tether’s balance sheet was prompted by Hayes, who said last week the firm was “in the early innings of running a massive interest-rate trade.” He argued that a 30% decline in its Bitcoin (BTC) and gold holdings would eliminate its equity and render its USDt (USDT) stablecoin technically “insolvent.” Both Bitcoin and gold constitute a meaningful portion of Tether’s reserves, and the company has expanded its gold exposure in recent years.
Tether has also faced criticism from S&P Global, which downgraded USDt’s ability to maintain its U.S. dollar peg due to exposure to “higher-risk” assets including gold, loans and Bitcoin. Tether CEO Paolo Ardoino rejected the downgrade as “Tether FUD” and referenced the firm’s third-quarter attestation in response.
USDt remains the largest stablecoin by market capitalization, with $185.5 billion in circulation and a market share of nearly 59%, according to CoinMarketCap.
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