Tether Stores $8 Billion Gold in Secret Swiss Vault for Stability

Tether Holdings SA, the issuer of the USDT stablecoin, has constructed and operates its own high-security vault in Switzerland to store approximately $8 billion worth of gold. This positions Tether among the largest non-bank and non-state gold holders, with nearly 80 metric tons of the precious metal.

Tether CEO Paulo Ardoino confirmed the existence of the company-owned facility, describing it as “the most secure vault in the world.” The exact location within Switzerland remains undisclosed for security reasons. This installation marks a significant operational shift, driven by cost efficiency as the company aims for substantial growth for its gold-backed token, XAUT. Ardoino explained that owning the vault would make custody more cost-effective as the size of the gold token grows.

While USDT is primarily backed by U.S. Treasuries, about 5% of its reserves consist of precious metals, including the $8 billion gold stash. This diversification may put the stablecoin at odds with proposed regulatory frameworks, such as the GENIUS Act, which mandates that stablecoins be backed by cash and cash equivalent assets. Ardoino argues that “Gold should be logically a safer asset than any national currency.” However, if such rules become law, Tether may face challenges in maintaining its gold holdings or risk exclusion from regulated markets in Europe and the United States.

The stablecoin issuer’s gold strategy comes at a time when fiat-pegged cryptocurrencies are experiencing tremendous growth. The total supply of stablecoins hit the $250 billion mark for the first time last month. At the time of this writing, the stablecoins had a collective market value of $255.3 billion, with USDT making up more than 62% of that amount. This strategic move by Tether to secure a substantial amount of gold underscores its efforts to diversify its reserves and enhance the stability of its stablecoin, providing additional security and trust to its users.

Tether's decision to store gold in a secret Swiss vault highlights its commitment to maintaining the confidentiality and security of its assets. Switzerland is renowned for its robust banking regulations and secure storage facilities, making it an ideal location for safeguarding valuable assets. This move not only reduces the risk of theft or loss but also ensures that Tether can maintain control over its reserves without relying on third-party custodians. The accumulation of $8 billion in gold is a strategic maneuver that reflects Tether's long-term vision for stability and security in the digital asset space. By diversifying its reserves and investing in security measures, Tether is positioning itself as a reliable and trustworthy player in the rapidly evolving world of cryptocurrencies. This approach is likely to bolster investor confidence and further solidify Tether's position as a leading stablecoin issuer.