- Tether now holds $8B in gold stored in a private vault, rivaling holdings of global banks.
- Stablecoin firms collectively hold $182.4B in U.S. Treasuries, ranking 17th among nations.
- New regulations may force stablecoin issuers to cut gold reserves in favor of Treasury assets.
Stablecoin firms are building financial reserves that rival central banks and sovereign nations. Tether, Circle, Paxos, and First Digital have amassed substantial U.S. Treasury holdings and gold reserves. These actions show a shift in global finance where crypto entities are operating like monetary authorities.
Tether leads with bold moves. The company has its own private vault in Switzerland holding $8 billion worth of gold. CEO Paolo Ardoino confirmed this, stating that Tether owns nearly 80 tons of gold. That puts Tether among the largest non-government gold holders globally.
Most of Tether’s gold supports its digital products. USDT, its main stablecoin, is backed mostly by Treasuries. However, Tether also offers a gold-backed token, XAUT, redeemable for physical gold in Switzerland. The company has issued tokens tied to 7.7 tons of gold, equal to $819 million.
Tether’s vault was chosen to reduce long-term custody costs. Ardoino said managing their own facility makes scaling more economical. The vault’s location remains undisclosed for security reasons.
Besides gold, Tether has over $125 billion in U.S. Treasury bills. These are short-term government securities known for stability and daily liquidity. Combined with Circle, Paxos, and First Digital, stablecoin issuers now hold $182.4 billion in Treasuries. This reserve size ranks them 17th globally among Treasury holders. They stand ahead of countries like the UAE, South Korea, and Germany.
Treasuries Dominate Stablecoin Reserves
Stablecoin companies favor Treasuries for several reasons. These assets clear instantly, offer daily liquidity, and yield over 5% annually. That allows firms to back coins like USDT and USDC while earning profits.
Circle holds its $55.2 billion in Treasuries through BlackRock’s Circle Reserve Fund. This ensures same-day liquidation if users rush to redeem USDC. Paxos’ PayPal USD is backed by reverse repurchase agreements collateralized with 97% U.S. Treasuries. First Digital holds 78% of its reserves, which is approximately $1.3 billion in Treasury bills. Together, these stablecoin firms support U.S. debt demand outside traditional banking channels. Ardoino said this structure boosts Treasury demand without relying on banks.
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However, regulators are paying close attention. The GENIUS Act would restrict stablecoin reserves to cash and short-term U.S. Treasury securities. The law aims to reduce risk by prohibiting the use of gold or corporate bonds. In Europe, MiCA already enforces strict reserve rules. It bans commodities like gold for euro-backed coins. If Tether seeks European approval, it must sell its gold holdings used for USDT.
Despite this, stablecoin executives argue their investments align with regulatory goals. Circle and Paxos have told policymakers that their reserve models protect users. They say high liquidity and narrow collateral protection are key during market stress.
Tether, however, continues to diverge. It sees gold as a hedge against global debt and U.S. financial uncertainty. Ardoino pointed out that many BRICS nations are also purchasing gold in large quantities. This move toward gold and Treasuries signals a new financial reality. Private crypto firms are shaping liquidity and reserve strategies. They act like mini-central banks with growing geopolitical influence.
This trend raises questions about monetary policy control. As stablecoins grow, they may challenge state-backed financial systems. Global regulators now face the challenge of balancing innovation with oversight.
