Morgan’s Bombshell Report Questions Tether’s Reserves—Hails RLUSD as the Safer Stablecoin Bet

Wall Street’s digging deep into stablecoin reserves—and Tether’s feeling the heat.

Morgan just dropped a report that doesn’t pull punches. It raises serious questions about Tether’s backing. Calls out opacity. Points to gaps. And in classic finance fashion, it offers an alternative: RLUSD.

Safer, cleaner, more transparent—or so they claim.

Because nothing says 'trust us' like a bank-approved stablecoin, right? Just what crypto needed: another product wrapped in suits and fine print.

Guess we’ll see who’s really backed when the music stops.

TLDR

• Bill Morgan criticized Tether for not using a third-party custodian to manage its reserves.
• He stated that Tether has never agreed to undergo credible audits from independent external firms.
• Morgan praised Ripple’s RLUSD for its partnership with BNY Mellon to hold its reserves securely.
• RLUSD saw a 26% increase in market cap over the past month as adoption grew.
• The Bullish IPO proceeds were recently settled in RLUSD, showing its expanding financial utility.

Tether and Ripple’s RLUSD are in the spotlight as a crypto lawyer questions reserve practices amid expanding U.S. compliance focus. Bill Morgan criticized Tether for lacking third-party custodianship and audits, while backing RLUSD for its robust oversight. This comparison arises as Tether expands into the U.S. market and RLUSD posts strong growth.

Tether Faces Scrutiny Over Reserve Management

Tether appointed Bo Hines as crypto strategic advisor on Tuesday to support its U.S. expansion and compliance objectives. The move follows rising political momentum, with Trump’s pro-crypto stance and the recent passage of the GENIUS Act. Tether reported $2.6 billion in Q2 profits and issued $13.4 billion in USDT during that quarter.

However, pro-XRP lawyer Bill Morgan raised concerns about the firm’s reserve handling despite its recent gains and verified holdings. “Tether does not use an independent third-party custodian to hold its reserves,” Morgan stated. He also criticized Tether’s refusal to undergo credible audits by external firms.

There is only one fact I don’t like about Tether. It does not have an independent third-party holding its reserves in the way that Ripple has arranged for @BNYglobal to hold the reserves for RLUSD

That is enough for me to be more comfortable with RLUSD . https://t.co/ajcJd6Hxel

— bill morgan (@Belisarius2020) August 19, 2025

Tether has not lost its peg to the U.S. dollar, a point Morgan acknowledged positively. Still, the lack of external custodianship and audit transparency remains a major issue. One user noted, “That’s Negative fact no.2,” which Morgan endorsed in reply.

RLUSD Gains Momentum With Traditional Integration

Ripple’s RLUSD has surged 26% in market cap this month, rising from $527 million to $666 million. Morgan cited its custody partner BNY Mellon as a key differentiator that strengthens RLUSD’s reliability. “RLUSD uses BNY Mellon for custody, making it a more reassuring option,” Morgan stated.

The RLUSD stablecoin was recently used to settle proceeds from the Bullish IPO, a major milestone in its adoption. Jack McDonald, Ripple’s SVP of Stablecoins, said, “RLUSD on XRPL is only becoming more integrated in traditional financial rails.” He highlighted its growing use in cross-border payments, collateral, and now IPO settlements.

McDonald also emphasized RLUSD’s reputation for compliance before the GENIUS Act. He stated the stablecoin was already viewed as a standard in both crypto and traditional finance. Now, with regulatory gates opening, Ripple continues to expand RLUSD’s role in mainstream finance.

U.S. Policy Shifts Benefit Ripple’s RLUSD

The U.S. Office of the Comptroller of the Currency now permits community banks to partner with stablecoin firms. This decision benefits RLUSD directly, as Ripple seeks a U.S. banking license to deepen financial integration. These steps aim to align RLUSD with traditional institutions further further.

As RLUSD grows in utility, its structure contrasts sharply with Tether’s approach. Ripple’s emphasis on third-party custody and regulatory engagement positions RLUSD as a compliant option. Morgan’s endorsement underlines RLUSD’s growing appeal among legal and financial experts.