What is Tether (USDT)?

Tether issues USDT, a token intended to hold a value of one dollar, backed by reserves the company holds. It is the oldest surviving stablecoin, the largest by a wide margin, and by transaction count probably the most used asset in the industry — more people move USDT in a day than move bitcoin.

Its dominance is not a crypto phenomenon so much as an emerging-markets one. For someone in Argentina, Nigeria, Turkey or Vietnam holding a currency that loses value monthly, USDT is a dollar account that does not require a bank's permission. Most of that flow runs over TRON, which carries close to half the world's USDT because it has been the cheapest reliable rail for years.

What is actually in the reserves

Tether's Q2 2026 attestation, produced by BDO Italia, showed $187.75 billion of assets against $183.64 billion of liabilities — $4.11 billion of excess reserves. The composition is cash and cash equivalents, short-dated US Treasury bills, secured loans, gold and bitcoin.

Two things about that list. It is dominated by Treasury bills, which makes Tether one of the larger holders of US government debt in the world and is why the company earns so much: $1.04 billion of net profit in Q1 2026 and $1.5 billion of net operating profit in Q2. And it contains items — secured loans, gold, bitcoin — that a regulated money market fund could not hold, which is the substance of the long-running criticism.

Attestation is not audit, and the difference matters

An attestation is a snapshot: an accounting firm confirms the assets existed on a specific date. An audit examines controls, valuation methods and the processes that produce the numbers across a period. Tether has never published a full audit by a Big Four firm, and has said for over a decade that one is coming.

That is the honest state of it. The attestations are real, they are produced by a recognised firm, and they are a weaker instrument than what a bank or a listed company provides. Whether that gap matters depends entirely on whether you think the numbers are wrong, and thirteen years of USDT redeeming at par is the counter-evidence.

Standing outside the US regime, deliberately

The GENIUS Act, signed in mid-2025, created a federal payment-stablecoin licence requiring a US-domiciled issuer, 1:1 cash and short-Treasury reserves, monthly attestations and federal supervision. Tether does not qualify — it is not US-domiciled, and its January 2025 relocation to El Salvador moved it further away rather than closer.

This is a choice rather than a failure. Tether's users are overwhelmingly outside the United States, its reserve composition would not survive the licence's requirements, and its profitability depends on holding assets a regulated issuer could not. It has decided that the offshore dollar market is bigger than the American one.

• A dollar account for people whose local currency is failing and whose banking access is limited — the largest use by number of people.
• The base trading pair on almost every exchange; most crypto prices are quoted in USDT.
• Settlement between exchanges, market makers and OTC desks.
• Collateral across DeFi, though USDC is often preferred where compliance matters.

USDT's advantage is not features — it is liquidity. It is the deepest market, accepted everywhere, and switching costs for an exchange or a trader are real. Network effects of that size are the reason competitors with better disclosure have not displaced it.

USDT is minted when someone buys and burned when they redeem, so supply is a straightforward demand gauge. Net circulation was $183.4 billion in mid-September 2026, around 59% of a $312 billion stablecoin market, having been roughly $189.5 billion in Q1.

The business behind it

Tether earns the interest on the reserves and keeps it. Holders receive nothing. On a float near $184 billion, at prevailing short-term rates, that produces the profits the attestations show — $1.04 billion in Q1 2026, $1.5 billion in Q2 — from a company with a few hundred employees.

It is among the most profitable businesses per employee anywhere, and it explains everything about the competitive dynamics in stablecoins. PayPal pays 4% to attract holders; Tether pays nothing and holds the largest float. Distribution beats yield.

Excess reserves

$4.11 billion of assets above liabilities is the buffer between a mark-to-market loss and an undercollateralised token. It has grown as profits accumulated, and it is thin relative to the float — roughly 2% — which is the number to watch if the reserve's riskier components ever move sharply.

USDT cannot be staked. It is a claim on Tether's reserves, not a network asset, and there is no protocol behind it.

Every product paying a USDT yield is lending it to someone — an exchange, a DeFi protocol, a market maker. The interest on the reserve backing your USDT goes to Tether; anything you earn comes from a third party taking your tokens and doing something with them. That distinction is where most stablecoin losses have happened.

Reserve composition is the structural risk

Secured loans, gold and bitcoin are not cash. In a stress event where redemptions spike, Treasury bills sell at par and the other components may not. $4.11 billion of excess reserves against $183.64 billion of liabilities is a 2% buffer, and the assets most likely to fall are the ones least like cash.

No full audit after thirteen years

Quarterly attestations from BDO Italia are real and are not an audit. Tether has promised one for over a decade. The absence is the single most cited criticism and the one with the least movement.

Regulatory position is deliberate and exposed

Standing outside the GENIUS Act means US institutions increasingly cannot use USDT, and it means Tether's business depends on jurisdictions where the rules are less settled. Its El Salvador domicile and its history — including the 2021 settlements with the CFTC and the New York Attorney General over reserve disclosures — are part of that picture.

Concentration on TRON

Close to half of USDT circulates on a chain run by 27 elected validators, which has frozen addresses on request. That is efficient and it means a large share of the world's dollar-denominated crypto sits on the most centralised major network.

Freezing

Tether can and does freeze USDT at law enforcement request, and has frozen billions. If you hold USDT because it is a dollar nobody can take, that is not accurate — it is a dollar a bank cannot take, issued by a company that can.