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CoinShares Dismisses Tether Insolvency Fears, Reaffirms Financial Strength

CoinShares Dismisses Tether Insolvency Fears, Reaffirms Financial Strength

Cryptonewsland2025/12/07 16:24
By: by Wesley Munene
BTC+1.48%P-3.00%
  • CoinShares reassures that Tether has a $6.78 billion surplus and maintains a solid financial buffer.
  • Tether’s CEO, Paolo Ardoino, defends its reserve structure, emphasizing stability with U.S. Treasuries.
  • Tether’s recent growth extends beyond stablecoins, with $1.5 billion deployed in commodity trade lending.

Concerns about Tether’s financial stability have been circulating in the wake of warnings from BitMEX founder Arthur Hayes. He expressed fears that significant drops in the value of Bitcoin and gold holdings could undermine the stablecoin issuer’s equity. However, CoinShares’ head of research, James Butterfill, has dismissed these insolvency claims, assuring the public that Tether remains in a secure financial position.

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

CoinShares Responds to Tether Fears

In a market update on December 5, Butterfill responded to Hayes’s assertions, which suggested that a 30% drop in Bitcoin and gold values could erase Tether’s equity. CoinShares’ analysis confirmed that Tether holds over $181 billion in reserves, with liabilities of approximately $174.45 billion. This leaves a surplus of around $6.78 billion, indicating a solid financial buffer.

Tether’s defense comes as global markets face challenges. For example, Japanese government bonds have experienced volatility, and US employment data showed a decline of 32,000 jobs in contrast to the expected increase of 10,000. Despite these uncertainties, Butterfill reaffirmed that Tether’s reserves remain stable, citing its surplus as proof of financial health.

Tether’s Leadership Defends Company’s Position

Paolo Ardoino, the CEO of Tether, rapidly dismissed Hayes’s worries as well. He accentuated Tether’s financial status by offering a lengthy and thorough description and showing that the firm’s total assets are about $215 billion. In the opinion of Ardoino, Tether has a surplus of equity of nearly $7 billion, plus the $23 billion that has been retained as earnings, which all together makes a very strong financial position for the company.

re: Tether FUD

From latest attestation announcement (Q3 2025):

"Tether will continue to maintain a multi-billion-dollar excess reserve buffer and an overall proprietary Group equity approaching $30 billion."

Tether had (at end of Q3 2025) ~7B in excess equity (on top of the…

— Paolo Ardoino 🤖 (@paoloardoino) November 30, 2025

Ardoino criticized Hayes’s view, claiming that the warning overlooked important aspects of Tether’s corporate structure. He emphasized that Bitcoin and gold, which comprise just 12.6% of total reserves, are not the core of Tether’s financial strategy. The majority of Tether’s reserves are in short-term U.S. Treasuries, which provide more stability and less risk than volatile assets like cryptocurrencies and precious metals.

S&P Downgrade and Broader Market Concerns

Despite Tether’s financial assurances, it faced criticism from credit rating agencies, including S&P Global. On November 26, S&P downgraded Tether’s peg-stability rating, citing increased exposure to higher-risk assets and gaps in disclosure. This downgrade could impact Tether’s ability to operate on European Union exchanges under the new MiCA regulations. However, Ardoino rejected the downgrade, defending Tether’s overcapitalized position and the company’s strong asset backing.

While the downgrade has raised concerns, industry veterans have largely supported Tether’s financial strategy. Joseph Ayoub, former head of digital asset research at Citi, explained that Tether’s structure is significantly more secure than fractional reserve banking. He noted that the company’s substantial interest-bearing reserves, especially in U.S. Treasuries, generate substantial income, further supporting Tether’s stability.

Tether’s Growth Beyond Stablecoins

Beyond its role in issuing stablecoins , Tether has expanded into commodity trade lending, deploying around $1.5 billion in credit across various markets. This growth highlights the company’s versatility and ability to generate profits from different sectors, despite the volatility in the broader crypto and financial markets.

Tether’s USDT issuance has exceeded $174 billion in the third quarter of 2025 and continues to grow, showing the high demand for the stablecoin. The company’s strong financial performance and expanding operations have raised questions regarding Tether’s reserves, but they have also indicated that the firm is equipped to handle the present market difficulties.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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