Crypto analysts insist that Tether is financially stronger than ever, highly profitable, and operating with a fractional-reserve model.
BitMEX co-founder Arthur Hayes said that the world’s largest stablecoin issuer, Tether, is preparing for a Federal Reserve rate‑cut cycle. He is concerned that as Tether increases its exposure to Bitcoin and gold, it also increases the chance that a sharp pullback in those assets could weaken its equity cushion.
While Hayes called this a massive risk, the broader crypto market argues that Tether is far more financially strong than it is perceived to be.
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.… pic.twitter.com/ZGhQRP4SVF
— Arthur Hayes (@CryptoHayes) November 29, 2025
Hayes Sounds the Alarm
Hayes said that Tether’s latest disclosure shows a shift from pure cash-like instruments into Bitcoin and precious metals. With about $181 billion in total assets and $174 billion in liabilities, the issuer remains solvent on paper, but not fully liquid.
A sudden drop in Bitcoin or gold prices, Hayes warned, could put pressure on Tether’s surplus and spark panic over USDT’s backing. As reported earlier, S&P Global also expressed a similar concern, assigning Tether a “weak” stability rating while discussing heavier allocations toward risk assets.
But Tether dismissed the rating framework as outdated and argued that its massive settlement flows prove the robustness of its operations.
Analyst BitImmortal broke down the numbers. Roughly $140 billion of Tether’s $181 billion in assets sit in cash and equivalents. The remainder, almost $34 billion, is tied up in Bitcoin, gold, secured loans, and other investments.
Tether just dropped their latest reserves report and the numbers are serious.
– USDT Liabilities: $174B
– Cash & Cash Equivalents: ~$140B> Meaning:
If everyone tried to redeem $USDT at the same time, Tether is short by ~$34B in instant liquidity.The missing gap is backed by:… pic.twitter.com/Wv7aPrmjJ1
— Immortal 💥 (@BitImmortal) November 30, 2025
That structure resembles a fractional reserve system more than a fully liquid vault. Everything works fine under normal redemption conditions, but a panic could test how quickly Tether can mobilize those non‑cash reserves.
Still, solvency is not the issue. Assets exceed liabilities, and Tether continues to scale USDT supply while maintaining large buffers. The debate instead revolves around immediacy, i.e., how fast those reserves could be converted in an extreme redemption event.
Crypto Industry Pushes Back
Former Citi Research crypto lead Joseph countered Hayes’ argument by adding that the disclosure only reflects the matched reserve structure, not the firm’s entire balance sheet.
Tether also maintains a separate equity balance sheet, which includes corporate investments, mining operations, and potentially additional BTC reserves. This is not disclosed in the same report, but adds to the firm’s financial strength.
I spent 100’s of hours writing research on tether for @Citi. @CryptoHayes missed a few key points.
1) 𝐓𝐡𝐞𝐢𝐫 𝐝𝐢𝐬𝐜𝐥𝐨𝐬𝐞𝐝 𝐚𝐬𝐬𝐞𝐭𝐬 =/ 𝐚𝐥𝐥 𝐜𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐚𝐬𝐬𝐞𝐭𝐬
When tether generates $ they have a separate equity balance sheet which they don’t… https://t.co/pHSRr245Up
— Joseph (@JosephA140) November 30, 2025
He also added that Tether is one of the most profitable businesses on the planet. With over $120 billion in interest‑bearing Treasuries generating around 4% yields since 2023 and minimal operational costs, yearly profit sits near $10 billion.
This makes Tether’s equity immensely valuable, possibly in the tens of billions. Even if the firm faced a liquidity crunch, selling equity would be a realistic solution.
Joseph pointed out that banks themselves operate with far thinner liquid reserves. While banks hold just 5-15% of deposits in cash‑like assets, Tether’s mix is more conservative. The key difference is that banks have a lender of last resort. Tether does not. But that, he argued, doesn’t mean weakness, only a structural difference.
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