Tether is once again at the centre of industry-wide debate, as questions over the soundness of its balance sheet resurfaced following comments from former BitMEX CEO Arthur Hayes.
His recent warning suggested that Tether could be far more vulnerable to shifts in asset values than many believe. The suggestion triggered a fresh wave of speculation — but it also prompted an immediate rebuttal from institutional analysts who argue the criticism lacks grounding in current financial data.Key Takeaways
CoinShares argues Tether’s $6.8 billion reserve surplus contradicts insolvency fears.
Arthur Hayes warns that a major drop in Bitcoin and gold could erase Tether’s equity buffer.
S&P Global recently downgraded USDT’s peg resiliency, citing higher-risk reserve exposure.
In a December 5 research note, James Butterfill, head of research at CoinShares, addressed the renewed wave of concern by pointing directly to Tether’s latest attestation report.
According to that disclosure, the stablecoin issuer holds roughly $181 billion in assets against about $174.45 billion in liabilities, leaving close to $6.8 billion in net reserves.
Butterfill’s view is that while stablecoin risk should never be ignored, Tether’s surplus suggests its position is more stable than alarmists claim. He also emphasised the company’s extraordinary profitability — nearly $10 billion generated in the first nine months of this year alone — which he argued reflects a strong underlying business rather than one teetering on insolvency.
The Core of the Debate: Reserve Quality Versus Reserve Quantity
Hayes does not dispute that Tether currently shows a surplus. Instead, he argues that the composition of its reserves could become the problem, especially if its growing allocations to Bitcoin and gold face abrupt price declines.
In his analysis, a 30% slide in those two holdings could erase shareholder equity, which would leave Tether technically insolvent even if it continued to meet redemptions.
The point he raises is less about immediate collapse and more about future stress scenarios — a concern amplified by the fact that Tether has notably increased its exposure to gold in recent years.
Ratings Agencies Add Pressure, and Tether Pushes Back
This criticism did not come solely from Hayes.
Tether also confronted a downgrade from S&P Global, which lowered its view of how resilient USDT’s dollar peg is under stress. The rating agency cited the stablecoin’s exposure to assets viewed as higher risk — including gold, Bitcoin and private loans.
Tether CEO Paolo Ardoino dismissed the downgrade as yet another example of “Tether FUD,” arguing that external fears are disconnected from the figures laid out in its attestation report. Ardoino highlighted the firm’s surplus position and profitability as evidence that solvency worries are being exaggerated.
A Familiar Cycle in a Growing Market
If anything, the debate illustrates how Tether — as the largest player in the sector — sits under the brightest spotlight. With more than $180 billion in backing and over $100 billion in circulation, it is effectively functioning as a private central bank inside crypto markets.
As such, its reserve strategy inevitably attracts scrutiny from traders, analysts and regulatory voices — especially during phases of market stress or shifting macro conditions.
Butterfill’s defence and Hayes’ caution underline a broader philosophical divide: whether stablecoins should remain conservative in reserve design, or whether companies like Tether can operate profitably while embracing market exposure.
That question is unlikely to fade soon.
