CoinShares, one of Europe’s largest digital-asset investment firms, is pushing back on renewed questions about Tether’s ability to cover its USDT liabilities after comments from BitMEX co-founder Arthur Hayes suggested the stablecoin issuer could be vulnerable to a sharp drop in the value of some reserve assets.
In a market note published on Dec. 5, CoinShares’ head of research, James Butterfill, said the latest solvency concerns “look misplaced,” pointing to Tether’s most recent attestation, which shows a headline surplus of assets over liabilities. Butterfill argued the numbers do not, at present, indicate a systemic vulnerability for USDT.
The recent pushback follows Hayes’ recent warning that as Tether increases its exposure to Bitcoin and gold, it will also make it increasingly likely that a steep pullback in these assets could undermine its cushion on equity. He said a roughly 30% decline in those assets could, in theory, wipe out Tether’s equity buffer and render USDT “theoretically insolvent.”
That argument quickly spread across crypto news sites and social media feeds. Butterfill replied with a short assessment of the data. The most recent attestation by Tether shows $181 billion in reserves and approximately $174.45 billion in liabilities, resulting in a surplus of nearly $6.55 billion. The study note also noted Tether’s abnormally strong profitability this year, with a year-to-date profit of more than $10 billion, and found that the available data at present does not imply a systemic weakness.
CoinShares acknowledged that there are risks associated with stablecoins and should not be overlooked, but still stated that the current Tether data have not shown signs of systemic vulnerability.
“Tether is still one of the most profitable companies in the sector, generating $10 billion in the first three quarters of the year — an unusually high figure on a per-employee basis,” CoinShares’ head of research wrote.
Tether’s Q3 disclosures — confirmed in an attestation it issued and widely reported by industry press — break down substantial portions of its reserves as large holdings of U.S. Treasuries (roughly $135 billion), along with approximately $12.9 billion of gold and $9.9 billion of Bitcoin.
Those gold and Bitcoin positions are exactly the ones Hayes named as potential sources of volatility; CoinShares recognised the exposure, but added that the headline reserve — liability gap and strong profitability mitigate near-solvency risk.
Tether counters solvency fears as critics target high-risk assets
Although speculation about Tether’s financial health is hardly new — media outlets have been tracking its reserves and asset backing for years — the latest flurry of solvency concerns appears to have arisen thanks to Arthur Hayes.
Last week, the BitMEX co-founder said it was “in the early innings of running a massive interest-rate trade,” claiming a 30% drop in its Bitcoin and gold holdings would “wipe out their equity” and leave its USDt stablecoin technically “insolvent.” Both assets make up a substantial portion of Tether’s reserves, with the firm increasing its gold exposure in recent years.
Tether is facing criticism from more than just Hayes. CEO Paolo Ardoino recently pushed back on S&P Global’s downgrade of USDt’s ability to defend its US dollar peg, dismissing the move as “Tether FUD” — shorthand for fear, uncertainty, and doubt — and citing the company’s third-quarter attestation report in its defense.
S&P Global downgraded the stablecoin due to stability concerns, citing its exposure to “higher-risk” assets, including gold, loans, and Bitcoin. According to CoinMarketCap, Tether’s USDt remains the largest stablecoin in the cryptocurrency market, with $185.5 billion in circulation and a market share of nearly 59%.
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