Key notes
- Arthur Hayes has warned that Tether’s exposure to Bitcoin and gold increases the risk of a liquidity crisis.
- Analysts show that Tether has over $181 billion in assets, but only $140 billion in instantly liquid reserves.
- Joseph, a former head of Citi Research, says Tether is much more powerful than critics think.
Arthur Hayes, co-founder of BitMEX, said the world’s largest stablecoin issuer, Tether, is preparing for a round of Federal Reserve rate cuts. He fears that as Tether increases its exposure to Bitcoin and gold, it also increases the risk that a sharp pullback in those assets will weaken its equity cushion.
While Hayes called this a huge risk, the broader crypto market says Tether is far more financially sound than many think.
The folks at Tether are in the early stages of a massive interest rate operation. The way I read this audit is that they think the Fed is going to cut rates, which will crush their interest income. In response, they buy gold and $BTC this should in theory moonlight as the price of silver falls.… pic.twitter.com/ZGhQRP4SVF
-Arthur Hayes (@CryptoHayes) November 29, 2025
Hayes sounds the alarm
Hayes said Tether’s latest disclosure shows a shift from purely monetary instruments to Bitcoin and precious metals. With approximately $181 billion in total assets and $174 billion in liabilities, the issuer remains solvent on paper, but not completely liquid.
A sudden drop in Bitcoin or gold prices, Hayes warned, could put pressure on Tether’s surplus and trigger panic over USDT support. As previously reported, S&P Global also expressed a similar concern, giving Tether a “low” stability rating while discussing a greater allocation to risky assets.
But Tether dismissed the rating framework as outdated and argued that its massive settlement flows proved the robustness of its operations.
Analyst BitImmortal crunched the numbers. About $140 billion of Tether’s $181 billion in assets are in cash and equivalents. The rest, almost $34 billion, is invested in Bitcoin, gold, collateralized loans and other investments.
Tether just released its latest reserves report and the numbers are serious.
– USDT liabilities: $174 billion
– Cash and cash equivalents: ~$140 billion> Meaning:
If everyone tried to buy back $USDT At the same time, Tether is short about $34 billion in instant liquidity.The missing gap is supported by: … pic.twitter.com/Wv7aPrmjJ1
– Immortal 💥 (@BitImmortal) November 30, 2025
This structure is more like a fractional reserve system than a fully liquid vault. Everything works fine under normal buyback conditions, but a panic could test how quickly Tether can mobilize these non-monetary reserves.
Yet solvency is not the problem. Assets exceed liabilities and Tether continues to increase the supply of USDT while maintaining large buffers. The debate instead revolves around immediacy, that is to say the speed with which these reserves could be converted in the event of an extreme redemption.
The crypto industry is moving backwards
Former Citi Research head of crypto Joseph countered Hayes’ argument by adding that the disclosure only reflects the corresponding reserve structure, not the company’s entire balance sheet.
Tether also maintains a separate equity balance sheet, which includes company investments, mining operations, and potentially additional BTC reserves. This is not disclosed in the same report, but adds to the financial strength of the company.
I have spent hundreds 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 do not…
–Joseph (@JosephA140) November 30, 2025
He also added that Tether is one of the most profitable companies on the planet. With more than $120 billion in interest-bearing Treasuries generating returns of around 4% since 2023 and minimal operational costs, the annual profit is around $10 billion.
This makes Tether’s equity extremely valuable, perhaps in the tens of billions. Even if the company were facing a liquidity crisis, selling its shares would be a realistic solution.
Joseph pointed out that banks themselves are operating with much lower cash reserves. While banks only hold 5-15% of their deposits in liquid-like assets, Tether’s allocation is more conservative. The main difference is that banks have a lender of last resort. Tether does not do this. But this, he asserts, does not mean a weakness, but only a structural difference.
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A crypto journalist with over 5 years of industry experience, Parth has worked with leading media outlets in the crypto and finance world, gaining experience and expertise in the field after surviving both bear and bull markets over the years. Parth is also the author of 4 self-published books.
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