Tether moves toward Big Four audits and regulatory compliance

Tether hired KPMG to perform its first full financial statement audit, which ends the company’s decade of reliance on BDO Italia attestations. The GENIUS Act, signed into law on July 18, 2025, mandates audited reserve reporting for stablecoin issuers that intend to operate in the United States. For years, Tether published quarterly attestations that provided only a snapshot of reserves on a single day. These reports are not financial statements; they are selected financial information extracted from accounting records. These reports lack the testing of internal controls and asset tracing found in a professional audit. The implementation of the GENIUS Act provisions begins either 18 months after its July 2025 enactment or 120 days after final implementing regulations are published by the OCC, and this creates an urgent deadline for all major stablecoin issuers. The OCC published its notice of proposed rulemaking on March 2, 2026, and the FinCEN and OFAC joint proposal for AML and sanctions compliance closed for comments on June 9, 2026. Tether already launched USAT, a separate stablecoin compliant with the GENIUS Act, in January 2026 through an OCC-regulated bank. This move follows historical regulatory pressure, such as the $41 million CFTC fine in 2021 and the $18.5 million New York Attorney General settlement regarding USDT reserve misrepresentations. These combined penalties of $59.5 million show why Tether must move beyond simple attestations to satisfy new federal standards.

Tether maintains massive liquidity to support a USDT supply that exceeds $183 billion across various blockchain networks. As of the June 30, 2026, reserves report, the company held $187.75 billion in total assets against $183.64 billion in total liabilities. This leaves $4.11 billion in net equity. The distribution of USDT remains concentrated, with $89.88 billion on Tron, $87.87 billion on Ethereum, and $2.96 billion on Solana. The reserve composition includes a large allocation to U.S. Treasury bills, which comprise roughly 80% to 84% of total assets. Tether also holds 92,647 BTC, a reserve valued at approximately $7.64 billion. The company added 8,888 BTC in the first quarter of 2025, an acquisition that brought total holdings to 92,647 BTC. While Bitcoin and gold provide diversification, they also introduce market-price exposure. Tether holds more than $135 billion in U.S. Treasuries, which makes it one of the largest buyers of government debt globally. The company maintains a separate proprietary investment portfolio in areas like AI and energy that is worth more than $20 billion. This portfolio sits outside the reserves that back USDT. Tether’s USDT supply grew by 36% in 2025, which was slower than the 73% growth seen for USDC.

Senator Richard Blumenthal, the ranking member of the Senate Permanent Subcommittee on Investigations, requested records from Cantor Fitzgerald on October 8 regarding its relationship with Tether. The inquiry focuses on Cantor’s 5% stake in Tether, which Blumenthal estimates grew from $600 million to $10 billion since Donald Trump returned to office. The Senator also examined the financial involvement of Howard Lutnick, who served as Cantor Chairman before his appointment as Commerce Secretary in February 2025. Specifically, the letter asks for details regarding a $192 million distribution and any loans that allowed the transfer of ownership to the Lutnick family. Cantor acts as a custodian for a significant portion of Tether’s U.S. Treasury bill reserves. Does the current structure of Cantor’s investment and custodial roles provide enough separation to prevent conflicts of interest? The investigation follows a subcommittee report that analyzed 846 wallets and found that 84% of them transacted exclusively or nearly exclusively in USDT. Tether reported that it froze approximately $550 million in USDT linked to Iranian shadow banking networks this year. Tether works with more than 140 law enforcement offices across 45 jurisdictions to assist cases involving illicit stablecoin use.

USDC, issued by the Boston-based company Circle, operates under a different regulatory model. Circle provides monthly attestations from Deloitte and keeps its reserves in cash and short-dated Treasury bills managed by BlackRock. This conservative approach contrasts with the inclusion of Bitcoin and secured loans in Tether’s portfolio. While USDC saw a depeg in March 2023 due to the collapse of Silicon Valley Bank, Tether experienced a dip to $0.95 in May 2022. Because Tether is not MiCA-compliant, European exchanges like Kraken and Coinbase have begun delisting USDT for EU users. You should monitor the outcome of the KPMG audit to determine if Tether can successfully enter the regulated U.S. market. Tether has a minimum redemption threshold of $100,000 for institutional counterparties.

Tether is attempting to buy legitimacy through the KPMG audit.