CoinShares Reveals: Tether’s Massive Profits & Surplus Reserves Shield Against Volatility Risks
Tether isn't just surviving market storms—it's building a financial fortress. New analysis from digital asset giant CoinShares throws a spotlight on the stablecoin behemoth's underlying strength, arguing its profit engine and bulging reserve cushions act as a critical buffer against the crypto sector's infamous volatility.
The Profit Shield
Forget empty promises. Tether generates staggering profits—real cash—primarily from the interest earned on its colossal reserve assets. This isn't speculative paper gains; it's a revenue stream that directly fuels its surplus capital. That war chest isn't sitting idle. It serves as a first line of defense, ready to absorb unexpected shocks or redeem requests without touching the core reserves backing each USDT.
Resilience by Design
The model turns traditional finance risk assessment on its head. Instead of relying solely on asset-liability matching, Tether's structure adds a powerful profit-generating layer that continuously reinforces its stability. It creates a self-perpetuating cycle: reserves generate earnings, earnings bolster surplus capital, and surplus capital dampens systemic risk. Critics who paint all stablecoins with the same risky brush miss this fundamental engineering—though, in finance, a healthy dose of cynicism towards any centralized power holder is always a wise investment.
The takeaway? In a sector defined by wild price swings, Tether has quietly built an economic moat. Its profitability isn't just a bonus for shareholders; it's becoming a core pillar of perceived stability for the entire ecosystem. That might just be the ultimate hedge.
CoinShares says Tether’s profits and surplus reserves blunt volatility risks
CoinShares acknowledged that there are risks associated with stablecoins and should not be overlooked, but still stated that the current Tether data have not shown signs of systemic vulnerability.
“Tether is still one of the most profitable companies in the sector, generating $10 billion in the first three quarters of the year — an unusually high figure on a per-employee basis,” CoinShares’ head of research wrote.
Tether’s Q3 disclosures — confirmed in an attestation it issued and widely reported by industry press — break down substantial portions of its reserves as large holdings of U.S. Treasuries (roughly $135 billion), along with approximately $12.9 billion of Gold and $9.9 billion of Bitcoin.
Those gold and bitcoin positions are exactly the ones Hayes named as potential sources of volatility; CoinShares recognised the exposure, but added that the headline reserve — liability gap and strong profitability mitigate near-solvency risk.
Tether counters solvency fears as critics target high-risk assets
Although speculation about Tether’s financial health is hardly new — media outlets have been tracking its reserves and asset backing for years — the latest flurry of solvency concerns appears to have arisen thanks to Arthur Hayes.
Last week, the BitMEX co-founder said it was “in the early innings of running a massive interest-rate trade,” claiming a 30% drop in its Bitcoin and gold holdings WOULD “wipe out their equity” and leave its USDt stablecoin technically “insolvent.” Both assets make up a substantial portion of Tether’s reserves, with the firm increasing its gold exposure in recent years.
Tether is facing criticism from more than just Hayes. CEO Paolo Ardoino recently pushed back on S&P Global’s downgrade of USDt’s ability to defend its US dollar peg, dismissing the MOVE as “Tether FUD” — shorthand for fear, uncertainty, and doubt — and citing the company’s third-quarter attestation report in its defense.
S&P Global downgraded the stablecoin due to stability concerns, citing its exposure to “higher-risk” assets, including gold, loans, and Bitcoin. According to CoinMarketCap, Tether’s USDt remains the largest stablecoin in the cryptocurrency market, with $185.5 billion in circulation and a market share of nearly 59%.
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