Arthur Hayes says Tether is effectively making a leveraged macro bet — and if it goes wrong, USDT could be in serious trouble.
The BitMEX co-founder has raised fresh concerns about the stablecoin giant’s balance sheet after reviewing its latest attestation. According to Hayes, Tether’s growing exposure to Bitcoin and gold, combined with its dependence on high interest income from U.S. Treasuries, creates a solvency risk if markets turn sharply against it.
A macro trade hiding inside a stablecoin
Tether’s latest disclosures show it holds around $9.86 billion in Bitcoin and $12.92 billion in precious metals, primarily gold. On paper, those positions look like a bullish bet on “hard assets.” But Hayes argues they also expose Tether to significant downside.
He calculated that if the combined value of Bitcoin and gold on Tether’s books dropped by about 30%, the hit would be big enough to wipe out the company’s equity buffer. In that scenario, Tether “would be in theory insolvent,” he wrote.
That kind of drawdown is not hypothetical in crypto terms. Bitcoin has repeatedly seen falls of 30% or more within relatively short timeframes, and gold is not immune to multi-percentage swings during macro shocks. Hayes’ point is that a stablecoin issuer, whose main purpose is to preserve a $1 peg, is now intertwined with volatile assets that can rapidly erode capital.
A bet on the Fed — and on falling rates
Hayes went further, arguing that Tether’s entire balance sheet reflects a view on future U.S. Federal Reserve policy. Today, the company earns a large portion of its profits from interest on U.S. Treasury bills and other short-term fixed-income instruments. As long as rates stay high, that stream of income is enormous.
But Hayes believes Tether is positioning for a different world: one where the Fed cuts rates and the yield on Treasuries collapses. In such an environment, the rich interest income Tether currently earns would shrink dramatically. To offset that, Hayes says, the company appears to be buying more Bitcoin and gold — assets that, in theory, should benefit when “the price of money falls,” meaning when interest rates decline and liquidity expands.
In his assessment, Tether is in “the early innings of running a massive interest rate trade.” If the macro thesis plays out — lower rates, rising BTC and gold prices, and continued confidence in USDT — the strategy could supercharge profits. But if the Fed keeps rates higher for longer while risk assets sell off, Tether would be squeezed: lower asset values on one side, and a potentially more cautious market on the other.
Equity cushion under pressure
The core of Hayes’ critique is about the size and quality of Tether’s equity cushion relative to the risks it is taking. Equity represents the capital buffer that absorbs losses before they impact customer funds. For a stablecoin issuer, this buffer is essential to maintaining trust that every token in circulation is backed by assets of equal or greater value.
By Hayes’ math, a 30% decline in the combined value of Tether’s Bitcoin and gold holdings would be enough to erase that cushion entirely. At that point, any further losses would, in theory, eat into the reserves backing USDT, undermining its claim of full collateralization.
He predicted that if this risk narrative gains traction, large USDT holders, market makers, and exchanges could start demanding far more transparency — potentially even near real-time views of Tether’s balance sheet — to assess solvency risk on an ongoing basis.
Pushback: “We’re using profits, not customer funds”
Not everyone agrees with Hayes’ reading. Some defenders of Tether’s strategy argue that the company is not gambling with user funds, but deploying profits and excess reserves. According to this view, Tether mints new USDT only when there is direct demand, and then invests the surplus generated from operations into Bitcoin and gold.
Under this framework, the volatile assets are seen as an additional upside play on top of a conservative core reserve, rather than an essential part of backing user balances. If their value fell, the argument goes, users would still be fully backed by the more traditional assets on the balance sheet, even if Tether’s own shareholder equity took a hit.
Hayes challenged this explanation. He pointed to Tether’s own attestation figures and asked why, if this narrative is accurate, the company’s “cash assets,” as it defines them, appear to be lower than its outstanding liabilities. “What am I missing here?” he asked publicly, suggesting that the numbers do not comfortably support the idea that only profits are being put into volatile instruments.
What’s actually on Tether’s balance sheet?
Tether’s reserves, according to its latest breakdown, total about $181.22 billion, backing the tokens in circulation. The single largest slice is U.S. Treasury bills, at roughly $112.42 billion — a huge position that anchors its role as a dollar-pegged stablecoin and generates substantial interest income.
In addition, Tether holds approximately $17.99 billion in overnight reverse repurchase agreements and $6.41 billion in money market funds. These are typically very liquid, short-duration instruments considered relatively low risk, which further support the peg.
Alongside these, the company’s growing allocations to Bitcoin and precious metals now account for tens of billions of dollars in exposure. That combination means Tether is straddling two worlds: on one side, ultra-conservative, dollar-based instruments; on the other, speculative and macro-sensitive assets.
For critics like Hayes, the mix raises a fundamental question: where is the line between reasonable diversification and taking on market risk that is incompatible with the promise of a “stable” coin?
Why this matters for USDT users and the wider crypto market
USDT is the most widely used stablecoin in the world and a core piece of infrastructure for crypto trading, DeFi, and cross-border flows. Any serious doubts about its solvency or backing could have repercussions far beyond Tether itself.
If traders begin to suspect that the equity cushion is thin or that reserves are exposed to large market swings, they could start to de-risk, moving into other stablecoins or fiat. That kind of shift, even if gradual, can pressure the peg, widen spreads on exchanges, and increase volatility across crypto markets.
On the other hand, if Tether’s macro bet pays off — with BTC and gold rising as rates fall — the company’s reserves and equity could swell further, reinforcing its position. The tension between those two outcomes is what makes Hayes’ critique so impactful: it spotlights that one of crypto’s most systemic entities is not simply passively holding dollars, but actively playing a macro game.
Tether pulls back from mining in Uruguay
While its financial strategy draws scrutiny, Tether is also reshaping its operational footprint. The company confirmed that it is winding down its Bitcoin mining operations in Uruguay after failing to secure favorable electricity pricing.
As part of this move, Tether is reportedly cutting around 30 of its 38 staff members in the country, effectively dismantling most of its local presence. The Uruguay venture had been part of a broader push into energy and mining, positioning Tether not just as a financial issuer but as a player in Bitcoin’s infrastructure layer.
The closure underscores how sensitive mining economics are to energy costs and regulatory conditions. It also signals that Tether may be re-focusing on its core business of stablecoin issuance and asset management, especially at a time when its balance sheet decisions are under the microscope.
Transparency, attestation, and the call for real-time data
One of the longstanding criticisms around Tether has been the opacity of its reserves. While the company now regularly publishes attestations from third-party firms, these are snapshots at specific points in time rather than ongoing, real-time audits.
Hayes’ comments are likely to intensify calls for more granular and frequent disclosure, especially from institutional users who rely on USDT for liquidity and hedging. In a world where billions of dollars in value depend on the assumption that every token is fully backed, delays in visibility can translate into perceived risk.
Real-time or near real-time balance sheet monitoring remains technically and operationally challenging, particularly for a company managing tens of billions across different instruments and jurisdictions. Still, the direction of travel in the industry is clear: as stablecoins become more systemically important, expectations around transparency, risk management, and governance are rising.
The broader stablecoin landscape
Tether’s strategy should also be read in the context of a rapidly evolving stablecoin ecosystem. Competing issuers have taken different approaches to reserve composition and transparency, with some opting for strictly cash and short-term government securities, and others experimenting with tokenized assets or yield-generating products.
Regulators in multiple jurisdictions are crafting rules that will govern what assets can back a stablecoin, how much capital buffers are required, and what kind of disclosure is mandatory. A balance sheet that leans heavily into volatile assets like Bitcoin and gold could draw more attention as these frameworks solidify.
For users and institutions choosing between stablecoins, factors like reserve quality, regulatory oversight, and issuer behavior in times of stress are likely to matter more over time than marginal differences in yield or convenience.
A high-stakes trade in a fragile environment
Hayes’ warning ultimately boils down to this: Tether is not just passively parking dollars; it is making directional bets on interest rates and hard assets. Those bets may prove very profitable, but they also introduce scenarios in which a sharp move in Bitcoin or gold, combined with changing rate dynamics, could materially weaken the stablecoin’s safety margin.
For now, USDT continues to trade at or near its peg, and Tether’s reserves remain massive relative to its liabilities. However, as macro conditions evolve and scrutiny intensifies, the stability of the world’s largest stablecoin will increasingly depend not only on the size of its reserves, but on how carefully — or aggressively — those reserves are managed.