Hayes Warns of Solvency Risks as Tether Faces New Scrutiny
- Hayes warns Tether’s gold and Bitcoin holdings expose it to major downside risk if markets drop.
- He says a 30% decline in these assets could erase Tether’s equity and raise solvency concerns.
- Investors may push Tether for real-time reserve data as scrutiny over its balance sheet rises.
Tether drew sharp attention this week after Arthur Hayes warned that the stablecoin giant faces major balance-sheet risks. Hayes issued the warning on X, arguing that Tether is exposed to a position that could unwind if market conditions shift.
Hayes framed the situation as an early sign of stress around interest-rate expectations. He said Tether appears to expect the Federal Reserve to cut rates. He added that lower rates could hit the company’s income from Treasuries and short-term instruments. Tether now leans heavily on gold and Bitcoin to offset that pressure. Hayes noted that these assets can swing sharply during periods of uncertainty.
Hayes Raises Concerns About Tether’s Position
Hayes said Tether runs a large interest-rate trade through its reserve choices. He cited recent audit figures to support his view. He noted that Tether’s gold and Bitcoin holdings now reach more than $23 billion in combined value.
The company increased these allocations as yields on Treasuries peaked. He said the shift shows a strong expectation of falling interest rates. He also said a drop in yields would reduce Tether’s income from government bills.
According to Hayes, the strategy carries a meaningful downside. He argued that a 30% decline in Tether’s gold-and-Bitcoin bucket could erase the company’s equity. Such an event could raise questions about USDT’s solvency.
He added that some large holders may soon demand real-time balance-sheet visibility. These groups want clearer details on Tether’s reserve composition. Hayes suggested that exchanges may also seek new disclosures.
Tether holds the largest stablecoin in the market. USDT’s circulating supply stands around 184 billion tokens. Its nearest competitor, USDC, holds a circulating supply of 76.57 billion tokens.
Market volatility added pressure to the discussion. Bitcoin slipped 17% over the past month before rising 6% during the last week of November. BTC touched around $91,500 during the recent rebound and helped sentiment recover slightly.
Related: S&P Downgrades Tether, CEO Stands Firm on USDT’s Future
Tether Defends Its Assets as Market Pressure Builds
Reports show Tether controls more than $181 billion in total assets. Much of the portfolio sits in ultra-liquid securities. These include Treasury bills, repo agreements, and money-market instruments.
However, disclosures also show broader risk exposure. Tether expanded into secured loans, metals, venture positions, and Bitcoin. These categories attracted fresh scrutiny after S&P Global Ratings issued a weak stability score. The firm criticized Tether’s overall reserve structure. Tether rejected that assessment and called S&P’s methodology outdated.
Tether’s operational shifts added more headlines. The company closed its mining venture in Uruguay as it could not reach favorable energy pricing terms in the region.
The stablecoin issuer still wields significant influence in global markets. USDT liquidity supports trading across dozens of major exchanges. Traders rely on the token during volatile sessions that demand rapid settlement.
Hayes said the next few months may bring further attention to Tether’s balance sheet. He argued that any drop in gold or Bitcoin could heighten concerns. He said mainstream media outlets will likely increase coverage as uncertainty rises. Many noted growing interest in Tether’s reserve transparency. Some traders pointed to the scale of Tether’s holdings and said the company faces bigger expectations than ever.
