Concerns about stablecoin issuer Tether’s financial health resurfaced after BitMEX founder Arthur Hayes warned the firm could face trouble if its reserve assets fell sharply. CoinShares’ head of research, James Butterfill, pushed back in a Dec. 5 market update, calling those solvency fears “misplaced.”
Butterfill pointed to Tether’s latest attestation showing $181 billion in reserves against about $174.45 billion in liabilities, leaving a surplus near $6.8 billion. He acknowledged that stablecoin risks shouldn’t be ignored but said the current data do not indicate systemic vulnerability.
Hayes argued last week that Tether is effectively running a large interest-rate trade and that a 30% drop in its Bitcoin and gold holdings would wipe out equity and render USDT technically insolvent. Both Bitcoin and gold comprise significant portions of Tether’s reserves, and the company has increased its gold exposure in recent years.
Tether also faces scrutiny from S&P Global, which downgraded USDT’s ability to defend its dollar peg over concerns about exposure to “higher-risk” assets such as gold, loans and Bitcoin. Tether CEO Paolo Ardoino dismissed the downgrade as “Tether FUD,” citing the third-quarter attestation in defense of the company’s position.
Tether remains highly profitable, reportedly generating $10 billion in the first three quarters of the year, and is the largest stablecoin by circulation, with about $185.5 billion in USDT outstanding and roughly a 59% market share according to CoinMarketCap.
