Tether Engages Big Four Firm for Comprehensive Audit Amid Regulatory Scrutiny
2min read Tether, the issuer of the world's largest stablecoin, is reportedly engaging with one of the Big Four accounting firms to conduct a comprehensive audit of its assets reserve. This move aims to verify that its USDT stablecoin is backed at a 1:1 ratio with the US dollar, a claim that has been under scrutiny due to a lack of third-party audits. The audit is seen as a critical step for Tether to comply with upcoming stablecoin regulations in the US, which mandate independent audits and specific reserve requirements.
Tether CEO Paolo Ardoino has emphasized the importance of this audit, stating that it is the company's top priority. He also mentioned that the support from the US government, as indicated by President Trump's remarks, would facilitate this process. However, there is skepticism within the community regarding Tether's commitment to a full audit, given its history of internal reports and lack of third-party verification.
The upcoming stablecoin regulations, such as the proposed GENIUS Act, require stablecoin issuers to undergo independent audits and hold a significant portion of their reserves in assets like Treasury bonds. This regulatory environment makes a full audit not just a matter of transparency but also a necessity for Tether to continue operating in the US market. The company has already purchased $33 billion in Treasury bonds, but the political ties and substantial holdings have raised concerns among critics.
Ardoino's comments about the audit being feasible due to the US government's support have sparked questions about why such an incentive would be necessary for a routine audit. Tether's substantial profits and financial capabilities suggest that it should be able to afford the services of a Big Four firm without additional incentives. The community's skepticism is further fueled by the company's past actions and the political connections of its partners, such as Cantor Fitzgerald, which has ties to the US government.
Despite these challenges, Tether's efforts to secure a full audit are seen as a positive step towards greater transparency and regulatory compliance. The company's engagement with a Big Four firm is a significant development that could pave the way for future cooperation with the US government and other regulatory bodies. However, the success of this audit will depend on Tether's ability to address the community's concerns and demonstrate its commitment to full transparency.
Tether's USDT maintains its stable value by claiming to be pegged to the US dollar at a 1:1 ratio. This means each USDT token is backed by reserves equivalent to its circulating supply. These reserves include traditional currency, cash equivalents, and other assets. Earlier this month, Tether hired Simon McWilliams as chief financial officer in preparation for a full financial audit.
Industry concerns over Tether’s lack of audits have been growing. In September 2024, Cyber Capital founder Justin Bons was among those in the industry who voiced concerns about Tether’s lack of transparency. He stated that Tether is one of the biggest existential threats to crypto due to the lack of proof that it holds $118B in collateral. Just three years prior, in 2021, the United States Commodities and Futures Trading Commission (CFTC) fined Tether a $41 million civil monetary penalty for lying about USDT being fully backed by reserves.
Tether has also voiced disappointment over new European regulations that have forced exchanges like Crypto.com to delist USDT and nine other tokens to comply with MiCA. A spokesperson for Tether expressed disappointment with the rushed actions brought on by statements that do little to clarify the basis for such moves. However, Tether's efforts to secure a full audit are seen as a positive step towards greater transparency and regulatory compliance. The company's engagement with a Big Four firm is a significant development that could pave the way for future cooperation with the US government and other regulatory bodies. However, the success of this audit will depend on Tether's ability to address the community's concerns and demonstrate its commitment to full transparency.
