In the ever-volatile world of cryptocurrency, few names carry as much weight—or spark as much debate—as Tether. The company behind the world’s largest stablecoin, USDT, is once again at the center of a heated discussion about its financial health, risk management, and the broader implications for the crypto ecosystem. Recent disclosures, ratings, and public commentary from industry heavyweights have thrust Tether’s asset structure and business model into the spotlight, raising pointed questions about its resilience in the face of shifting economic tides.
Much of the current conversation was ignited by Arthur Hayes, co-founder of the BitMEX crypto exchange and a prominent market analyst. On November 29, 2025, Hayes sounded the alarm, warning that Tether was preparing for a Federal Reserve rate-cut cycle and, in the process, increasing its exposure to Bitcoin and gold. "The Tether folks are in the early innings of running a massive interest rate trade. How I read this audit is they think the Fed will cut rates which crushes their interest income. In response, they are buying gold and $BTC that should in theory moon as the price of money falls," Hayes posted on social media, as reported by multiple outlets.
Hayes’s concern centers on what he describes as a potentially risky shift in Tether’s asset allocation. According to Tether’s latest disclosure, the company held about $181 billion in total assets and $174 billion in liabilities—numbers that indicate solvency on paper, but not full liquidity. Roughly $140 billion of those assets sit in cash and cash equivalents, while the remainder—almost $34 billion—is tied up in Bitcoin, gold, secured loans, and other investments. This structure, as noted by analyst BitImmortal, resembles a fractional reserve system more than a fully liquid vault. "If everyone tried to redeem $USDT at the same time, Tether is short by ~$34B in instant liquidity. The missing gap is backed by:…" BitImmortal wrote, highlighting the challenge of quickly mobilizing non-cash reserves in a crisis.
Hayes took his warning a step further, speculating that a sharp pullback in Bitcoin or gold prices could put pressure on Tether’s equity cushion and spark panic over USDT’s backing. "A roughly 30% decline in the gold and BTC position would wipe out their equity, and then USDt would be, in theory, insolvent," Hayes argued, according to coverage by Cointelegraph and other financial news sources.
These concerns have not gone unnoticed by traditional financial watchdogs. S&P Global recently assigned Tether a "weak" stability rating, specifically citing the company’s heavier allocations toward risk assets like Bitcoin and gold. The ratings agency’s decision to downgrade USDT’s dollar-peg rating to its lowest score prompted a wave of fear, uncertainty, and doubt from some analysts and market participants.
But Tether’s leadership and a chorus of industry analysts have pushed back—hard. Paolo Ardoino, Tether’s CEO, was quick to criticize S&P Global’s methodology and conclusions. "S&P made the same mistake of not considering the additional Group Equity, nor the roughly $500 million in monthly base profits generated by US Treasury yields alone," Ardoino stated, referencing Tether’s Q3 attestation report. According to Ardoino, as of the end of Q3 2025, the Tether Group’s total assets stood at about $215 billion, while its total stablecoin liabilities were approximately $184.5 billion. Ardoino argued that S&P’s analysis failed to account for all of Tether’s assets and revenues, painting an incomplete picture of the company’s financial position.
Joseph Ayoub, the former lead digital asset analyst at Citi, echoed Ardoino’s critique and offered a robust defense of Tether’s fundamentals. Ayoub, who says he spent "hundreds" of hours researching Tether, insisted that the company’s disclosed reserves do not reflect the entirety of its balance sheet. "Their disclosed assets do not equal all corporate assets. When Tether generates money, they have a separate equity balance sheet which they don’t disclose in the same report, but it adds to the firm’s financial strength," Ayoub stated in a public thread.
Ayoub went on to highlight Tether’s extraordinary profitability, noting that the company has been generating around $10 billion in yearly profit from over $120 billion in interest-bearing Treasuries, which have yielded approximately 4% since 2023. With just 150 employees, Tether’s business model is exceptionally lean. "Tether has excess assets beyond what it reports, has an extremely lucrative business that generates billions of dollars in interest income with only 150 employees, and is better collateralized than traditional banks," Ayoub argued, as reported by CoinDesk.
To put things in perspective, Ayoub compared Tether’s reserve structure to that of traditional banks, which typically hold only 5-15% of deposits in cash-like assets. Tether’s mix, by contrast, is far more conservative. The main difference, Ayoub noted, is that banks have a lender of last resort—the central bank—while Tether does not. "That doesn’t mean weakness, only a structural difference," he said, emphasizing that Tether’s risk profile is distinct but not inherently problematic.
Still, the debate over Tether’s asset structure and risk management continues to rage. Supporters argue that the company’s massive settlement flows and robust profitability are clear indicators of strength. Critics, meanwhile, warn that Tether’s reliance on non-cash assets could be tested in the event of a market panic or a sharp downturn in the value of Bitcoin and gold.
For its part, Tether has dismissed S&P Global’s rating framework as outdated, arguing that its operational track record and ability to honor redemptions at scale are proof of its resilience. Indeed, Tether’s defenders point out that the company’s ability to scale USDT supply while maintaining large buffers is a testament to its operational robustness. As the crypto market continues to evolve, Tether’s role as a critical piece of infrastructure—and the scrutiny it faces—shows no sign of abating.
Ultimately, the question of Tether’s long-term stability may hinge less on the specifics of its balance sheet and more on the confidence of its users. In a world where perception can quickly become reality, Tether’s ability to weather storms—both real and imagined—will remain a defining test for the entire crypto industry.
