BitMEX co-founder Arthur Hayes has sounded a fresh warning about Tether’s reserve strategy, arguing that the world’s largest stablecoin issuer is positioning itself for an upcoming Federal Reserve rate-cut cycle but at the cost of taking on greater risk.
Hayes Flags Rising Exposure to Bitcoin and Gold
According to Hayes, Tether’s latest attestation shows a strategic shift away from largely cash-based holdings toward Bitcoin and gold, a move he believes could weaken the company’s equity cushion in the event of a sharp market correction.
Tether currently holds about $181 billion in assets against $174 billion in liabilities, meaning it remains solvent on paper — but not entirely liquid. Hayes warned that a sudden drop in BTC or gold prices could compress Tether’s surplus and trigger panic around USDT’s backing, similar to concerns highlighted by S&P Global when it assigned Tether a “weak” stability rating.
Fractional Liquidity, Not Insolvency
Blockchain analyst BitImmortal broke down the numbers, noting that nearly $140 billion of Tether’s assets remain in cash and cash equivalents. The remaining $34 billion is spread across Bitcoin, gold, secured loans and other investments.
This structure, he said, resembles a fractional reserve model, where everything functions smoothly under normal conditions but could be stress-tested under heavy redemptions. Importantly, solvency is not in question — Tether’s assets still exceed its liabilities.
Crypto Market Pushes Back at Hayes’ Concerns
Not everyone agrees with Hayes’ assessment. Former Citi Research crypto lead Joseph argued that Tether’s disclosures reflect only its matched reserves, not the company’s entire corporate balance sheet.
Tether maintains a separate equity structure that includes:
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corporate investments
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mining operations
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additional Bitcoin reserves
These do not appear in the reserve attestation but significantly strengthen the company’s financial position.
Tether’s Profit Engine Remains Massive
Joseph added that Tether is among the most profitable companies globally. With over $120 billion parked in U.S. Treasuries at ~4% yields and minimal operating expenses, the stablecoin giant is estimated to earn nearly $10 billion annually.
Tether itself dismissed S&P’s concerns, calling the rating framework outdated, and emphasized that its large, daily settlement flows prove the robustness of its reserves and operations.
The Debate Continues
The core disagreement is not about solvency — where Tether appears secure — but about liquidity speed, i.e., how fast its non-cash reserves could be converted during extreme market stress.
With the Fed inching closer to rate cuts and crypto markets heating up, Tether’s allocation strategy is now under sharper watch than ever.
