- Tether is reportedly engaging with a Big Four accounting firm for a long-awaited third-party audit, a step crucial for compliance with upcoming US stablecoin regulations.
- The potential introduction of the GENIUS Act would require stablecoin issuers to undergo independent audits and back reserves with assets like Treasury bonds.
- Despite its $13 billion profit last year, Tether has never submitted to a full audit, raising concerns about transparency and regulatory scrutiny.
Tether, the issuer of the world’s largest stablecoin, may be inching closer to US government cooperation, but not without clearing a major regulatory hurdle first.
A recent Reuters report shows that Tether is negotiating with a Big Four accounting firm for conducting a highly anticipated third-party audit, a step that will be crucial for US stablecoin regulation compliance in the future. However, there is not much information on which Big Four firm, PwC, EY, Deloitte, or KPMG, is involved and how far negotiations have progressed.
The coin is under greater pressure than ever before to do a full audit. With the potential introduction of the GENIUS Act on the horizon, US stablecoin issuers will have to offer independent audits and secure their reserves with holdings like Treasury bonds
Tether CTO Paolo Ardoino acknowledged the priority, stating, “It’s our number one priority. Now that we live in a time where it’s possible. If the President of the United States makes a statement that this is a number one priority for the US, the Big Four accounting firms will have to pay attention.”
Tether’s $13B Profits and the Missing Audit
Ardoino’s statements follow on from President Trump’s latest speech, where he alluded to stablecoins having a part to play in solidifying US dollar dominance. Such a stamp of approval would have a crucial role in determining regulatory frameworks as well as participation from major financial institutions.
In spite of having a leading position in the marketplace and earnings last year of a recorded $13 billion, the coin has never been subject to a full third-party audit, something that has raised suspicions among the crypto community. While the company has provided internal reports and hired a new CFO, critics argue these actions are not enough for actual transparency.
There is a suspicion that Tether might try a reserve-only audit, but not a full financial one. Big Four accounting firms, however, will not accept anything short of a comprehensive one. The fact that such a politically backed audit is needed makes one wonder why a well-established company like Tether has not gone down this route before.
Adding to the controversy, Tether revealed last year that it bought $33 billion in US Treasury bonds, 99% of which are said to be held by Cantor Fitzgerald. The company’s previous CEO, Howard Lutnick, just resigned to take the post of US Secretary of Commerce, further entangling Tether with political circles.
Tether Future at Risk as Audit Demands Grow
Regulators and industry commentators are divided on what’s ahead for Tether. Top investor Jason Calacanis wasn’t afraid to share his concerns, stating, “Tether has a tainted reputation, at least. It shouldn’t be able to buy US Treasury until they have a string of intense US regulatory audits—all the way back to their start. We’re risking a huge, unnecessary bet by letting this company into our financial system.”
With its vast Treasury holdings and growing political connections, Tether is in a strong position to solidify its presence in the US financial ecosystem. However, without a legitimate third-party audit, regulatory scrutiny could threaten its future in the American market.
As the stablecoin industry braces for impending regulations, all eyes are on Tether. Will it finally submit to a full audit, or will skepticism continue to cast a shadow over its operations?
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