Tether Takes Step Toward Transparency With First Accounting Firm Report Card

Tether, the world's largest stablecoin issuer, published an attestation on Tuesday verifying that it had $35 billion in assets backing a similar amount of its USDT token last month.

Produced by Cayman Islands-based accounting firm Moore Cayman, the document examines Tether’s holdings as of Feb. 28, 2021, at 23:59 UTC, finding the company had at least $35.28 billion in total assets against total liabilities of $35.15 million.

Tuesday’s attestation is the first third-party verification Tether has produced indicating its reserves match the amount of USDT in circulation since 2018, the first from an actual accounting firm since September 2017, and by far the least equivocal of the bunch. As such, it may help resolve some long-standing questions about the stablecoin’s backing.

Moore Cayman has a small team, according to its "People" page, and the firm says it specializes in working with financial-services firms.

To be clear, an attestation is not the same thing as an audit. The latter is designed to look for potential risks, while an attestation only evaluates whether the data being examined by the auditor is accurate. However, no stablecoin issuer has been able to secure an audit, including companies regulated by U.S. entities like the New York Department of Financial Services. In other words, the attestation puts Tether on par with stablecoin issuers such as USDC’s Centre, GUSD’s Gemini or PAX’s Paxos, at least when it comes to financial clarity.

As the largest stablecoin – with over $40 billion worth issued as of press time, according to Tether's transparency page — USDT plays an important role in the $1.8 trillion global cryptocurrency market. Because it usually trades at or near $1, USDT allows traders to move fiat currency (or a serviceable substitute) between exchanges quickly to capture arbitrage opportunities.

Tether plans to issue another attestation for March after it ends, followed by quarterly attestations thereafter.

These attestations are separate from the disclosures Tether intends to produce for the New York Attorney General’s office (NYAG).

"We are doing this on our own initiative to honor Tether’s commitment to further transparency. And although it is unrelated to our release of this assurance opinion, the settlement is another example of our commitment to transparency," said Stuart Hoegner, general counsel at Tether and its sister firm, Bitfinex.

Tether, Bitfinex and the NYAG settled a nearly two-year investigation into whether Bitfinex covered up the loss of nearly $1 billion in customer funds using Tether’s reserves last month. Part of the settlement entails Tether filing quarterly reports detailing its reserve composition for the next two years.

Tuesday’s attestation does not describe this composition, only noting that Tether’s “consolidated total assets amount to” over $35 billion.

Read more: NY AG’s $850M Probe of Bitfinex, Tether Ends in an $18.5M Settlement

While the attestation uses similar language to reports produced by Grant Thornton for the USDC stablecoin or Withum for the Paxos dollar, Moore Cayman notes that its attestation was conducted in accordance with a trio of international standards.

Centre, the issuer behind USDC, and Paxos are both based in the U.S., and their attestations are conducted in accordance with U.S. standards, according to notes on both documents.

“Since the founding of Tether, we have made earnest and continuing efforts to enhance our public disclosures and communications,” Hoegner said in a statement. “As a leader in the growing cryptocurrency industry, we remain committed to being among the most transparent stablecoins. This latest assurance opinion – and our dedication to providing further reports moving forward – is a reflection of that commitment.”

UPDATE (March 30, 2021, 14:25 UTC): Removed the phrase “in the bank” from the first paragraph. It was meant colloquially, but as noted later in the article the composition of Tether’s assets is not spelled out in the attestation, so it is unclear what percentage is cash in a literal bank. Adds additional detail about Moore Cayman.