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BitMEX co-founder Arthur Hayes has warned that Tether is at risk of balance sheet failure if its Bitcoin and gold reserves suffer a 30% decrease.
In his November 30 post, he targeted structural weaknesses in Tether’s recent asset allocation. It is suggested that the company linked its solvency to the performance of volatile risk assets rather than relying solely on the stability of government debt.
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Hayes criticizes Tether and stablecoin gold funds
Hayes’ assessment includes Tether’s third statement for Q3 2025, which reveals significant turnover in non-cash collateral. The report shows that the issuer now holds $12.9 billion in precious metals And $9.9 billion in Bitcoin.
According to Hayes, this allocation intentionally represents an “interest rate trade.” His thesis posits that Tether is preparing for a Federal Reserve cut that will pressure yields on its massive portfolio of US Treasuries.
“(Tether) believes the Fed will lower interest rates, killing its interest income. In response, it buys gold and BTC which should theoretically jump as the price of money,” Hayes noted.
However, Hayes argues that this strategy introduces asymmetric risk to the company’s thin layer of equity.
That figure exceeds Tether’s excess capital, making the company theoretically insolvent even if it remains operationally liquid, Hayes says.
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Such a scenario will probably require the holders of large parties and platforms to request real-time visibility in the budget to assess the health of the installation, he warned. Note that this notice is in line with S&P Global’s decision to rate the USDT with a “5” rating, the lowest in its scale.
Industry stakeholders are defending Tether
Industry proponents argue that the bankruptcy thesis confuses balance sheet accounting with actual liquidity risk.
Tran Heng, CEO of UQUID Card, dismissed the warning as fundamentally flawed.
He noted that most of Tether’s $181.2 billion balance sheet remains parked in highly liquid, low-risk instruments. In fact, the statement confirms that Tether holds $112.4 billion in US Treasury bonds And nearly $21 billion in recovery agreements.
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Hong claims that this “cash and cash equivalents” provides a wall of sufficient liquidity to cover Most of the USDT is in circulation.
Given this, Tether will remain fully redeemable even if a market downturn removes its equity barrier, he explained.
“Tether has always demonstrated a strong ability to recover, including the recovery of $25 billion in just 20 days during the 2022 market crisis (FTX Crisis), one of the biggest stress tests in the history of money,” said Hong.
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At the same time, Corey Klipsten, CEO of Swan Bitcoin, noted, Up to Tether’s leverage is more aggressive than traditional financial institutions.
Klipsten said Tether operates at about 26x leverage with an equity pad of 3.7%. About three-quarters of the assets are short-term sovereigns and repos, and the other quarter is a mix of BTC, gold, loans and obscure investments.
He stated that, a loss of 4% of the portfolio will eliminate common shares, while a decrease of 16% in the riskiest asset would have the same effect.
Despite the structural leverage, it is suggested that the risk is reduced thanks to the net profitability of Tether. Indeed, the stablecoin issuer is on the way Recording a profit that exceeds $15 billion this year.
In addition, Klipsten also noted that Tether owners recently withdrew a $12 billion dividend. After this, they argue that they have the ability to immediately refinance the company if the reserve barrier is breached.
