Written by: James Smith (@Snapcrackle), Ethereum Foundation

Compiled by: Yangz, Techub News

A woman walks into a mobile phone top-up kiosk to buy phone credit. This kiosk belongs to Tether; in North Carolina, a former White House official is operating a federally regulated stablecoin backed by U.S. Treasury bonds and custodied by Cantor Fitzgerald. This is also Tether; the board of directors of a publicly traded agribusiness conglomerate, recently replaced by a company that didn't even exist twelve years ago. That company is also Tether.

Most people's understanding of Tether is still stuck three to five years in the past. Crypto media still sees it as a stablecoin issuer with trust issues. Mainstream media still sees it as a potential scam. But neither of these perspectives can explain what Tether has actually become while everyone is still debating the old version.

What I discovered is a company that made over $10 billion in profit last year with only 300 employees (and plans to hire another 150), holds more U.S. Treasury bonds than Germany, and is quietly building a technology conglomerate—all of which is supported by the interest generated from other people's dollars deposited with it.

This article is a bit long. But it has no choice but to be long. The scale of Tether's operations means you need to have multiple perspectives in mind at the same time, and there's a certain tension between some of these perspectives.

background

Tether reported profits exceeding $13 billion in 2024 and over $10 billion in 2025. Considering it has only about 300 employees, no external investors, and no transaction fees for USDT transfers in the secondary market, this means that each employee generates an average of about $33 million in profit annually.

Tether doesn't make money through regular USDT transfers like credit card networks. Direct minting and redemption of USDT incurs a fee from the issuer (0.1% in some cases, with a minimum limit), but the billions of peer-to-peer and exchange transfers that make up the daily USDT trading volume do not generate any revenue for Tether.

In 2014, when designing the company, they discussed whether to charge a fee of 1 to 10 basis points per transaction, like Visa and Mastercard. They opted for zero fees. Tether CEO Paolo Ardoino stated in an interview that this was a well-thought-out decision, prioritizing adoption over revenue.

Tether's final business model looks nothing like a payments company, although it operates in a similar way. Tether makes money like a money market fund: it takes in dollars, invests them in short-term U.S. Treasury bonds, and then retains the returns. The difference is that money market funds return most of their returns to investors, while Tether keeps them all.

As of December 31, 2025, Tether held $122 billion in direct U.S. Treasury positions and had a total U.S. Treasury exposure of $141 billion (including indirect positions held through money market funds and repurchase agreements). Based on the Federal Reserve's interest rate of approximately 5%, and without including any other income, its benchmark yield would be approximately $6 billion to $7 billion.

The remaining gains came from gold (127.5 metric tons at the end of the year, which Ardoino says will grow to about 140 tons by early 2026), Bitcoin (96,184 coins), and a growing portfolio of venture capital and commodity positions.

As of early 2026, Tether estimated its global user base at over 550 million, using a methodology that combined on-chain wallet data with estimates from centralized platforms. This is not a verified number of unique users, but even with significant discounts, the figure remains substantial.

In 2025, of the total $33 trillion in on-chain stablecoin transactions, $13.3 trillion will be USDT on-chain transfers. Of these, $156 billion will be small payments under $1,000, and these everyday transfers reflect real economic activity, not just transactions.

McKinsey provides a real-world test of these figures—according to its 2025 estimates, the annualized scale of identifiable real-world payment activity in stablecoins (B2B, remittances, settlements, and spending on linked cards) is close to $390 billion, far less than the figures shown by the raw on-chain traffic data. There is a huge gap between "value transferred on-chain" and "actual payment for goods and services."

Tether's balance sheet data largely comes from BDO's assurance reports, including the year-end reasonable assurance engagement, but Tether still does not publish complete audited financial statements like traditional listed companies (this will be discussed later). However, its size is supported by sufficient third-party data (on-chain analytics data, government bond market data, and counterparty confirmation letters from Cantor Fitzgerald), making it irrational to completely ignore it.

Printing press

The most straightforward way to understand the Tether economic model is to imagine you're managing a savings account for hundreds of millions of people, mostly from countries where their currencies are constantly depreciating. They deposit US dollars with you. You invest those dollars in the world's safest and most liquid assets (short-term US Treasury bonds). You return to them a token that trades stably at $1 on major cryptocurrency exchanges worldwide.

You keep all the interest. And your users don't mind, because they wouldn't earn any interest anyway.

In Nigeria, where the local financial infrastructure is perhaps only 20% efficient, simply holding a stable US dollar is worth far more than a 4% annualized return. In Argentina, where inflation has exceeded 100% in recent years, holding something that doesn't depreciate is a product in itself. That return is Tether's fee, but nobody perceives it as a cost.

Ardoino has directly addressed this logic. In a podcast, he stated bluntly that the efficiency of the US financial system has reached 90%, and stablecoins can only push it to 95%. In emerging markets where efficiency is only 10% to 30%, USDT can raise it to 50%. He's not interested in playing the marginal game of 5% in the US; he's interested in playing the marginal game of 30% to 40% elsewhere.

Furthermore, the usage patterns reveal an interesting story, one that I believe will continue to evolve. Tether's Q4 2025 market report shows that 63.6% of USDT transfer value during that quarter came from single-asset transfers (pure USD flows, not part of multi-token DeFi transactions), and approximately 67% of the market capitalization remained in "savings" wallets with lower turnover rates. These are not the same metric, but together they paint a picture of the product being used as a currency, rather than a trading instrument.

This is also independently corroborated by researchers at the Bank for International Settlements, who found that the use of stablecoins is correlated with remittance costs and transaction demand far more strongly than that of Bitcoin or Ethereum, especially in emerging and developing economies. (This is unsurprising to anyone.)

Standard Chartered predicts that stablecoin savings in emerging markets could grow significantly by 2028, arguing that stablecoins effectively provide people with a synthetic dollar bank account, helping hundreds of millions of unbanked individuals. Their value proposition is not yield, but rather relief from the weakness and friction of their local currencies.

Tether's global marketing spending between 2020 and 2024 was less than $10 million, less than the cost of a single Super Bowl ad.

This growth was spontaneous, driven by the crisis. Ardoino said they didn't even understand why the market capitalization skyrocketed in 2020 until an internal analysis a few years later revealed that when pandemic lockdowns shut down the offline black market for physical US dollars in emerging economies, tech-savvy young people introduced USDT on their smartphones to their parents. The global black market for US dollars shifted to Tether and never looked back.

Interest rate sensitivity is the most critical analytical issue for Tether's business, and the 2025 data provides a real-world reference point. Profits fell from over $13 billion in 2024 to approximately $10 billion in 2025, a decrease of about 23%. Tether's own disclosures show that in 2024, Treasury bonds and repurchase agreements contributed about $7 billion to its profits. A rough estimate suggests that a 200 basis point drop in yield on its $122 billion direct Treasury bond holdings would reduce interest income by about $2.4 billion annually. This is significant, but not fatal, especially considering its hard asset hedging (gold and Bitcoin holdings tend to appreciate in a rate-cutting environment). However, it does mean that the profitability story depends to some extent on the direction of the interest rate cycle, a point Ardoino understands. He explicitly stated that investing in R&D in artificial intelligence, energy, and telecommunications is precisely to hedge against the risks of future interest rate cuts.

What's in Tether's treasury?

Tether releases quarterly assurance reports prepared by BDO Italia, one of the world's Big Five accounting firms. The quarterly reports provide limited assurance under ISAE 3000. The year-end reports (covering the fourth quarters of 2024 and 2025) are more robust: they fall under reasonable assurance engagements and involve more rigorous testing. However, neither of these is equivalent to a full audited financial statement in the traditional sense for a publicly traded company. BDO reviews Tether's statements regarding its reserve assets and reports on whether these statements contain material misstatements. It does not provide the comprehensive financial audit typically demanded by institutional investors.

As of December 31, 2025, BDO’s reasonable assurance report confirmed that Tether’s total assets exceeded $192.8 billion, total liabilities were $186.5 billion (of which $186.4 billion was related to issued tokens), and excess reserves were approximately $6.3 billion.

The Brookings Institution found that stablecoin issuers have become significant marginal buyers of U.S. Treasury bonds, second only to a handful of foreign jurisdictions in recent times. Tether alone holds more U.S. Treasury bonds than Germany, the UAE, Spain, or Australia combined. This is no longer just a cryptocurrency story; Tether has become part of the short-term U.S. Treasury demand system.

In fact, the composition of the reserve assets itself speaks volumes. According to the attestation report and supplemental disclosures, approximately 82% is U.S. Treasury securities, 10% is money market funds, 5% is repurchase agreements, and the remainder consists of gold, Bitcoin, secured loans, and corporate bonds. In 2021, however, 49% of the reserve assets were commercial paper. Actual cash amounted to only about 3%.

This is a real, documented shift driven by regulatory pressure. But the trust deficit is also real, and it's self-inflicted. Let's briefly review the history:

In 2019, the New York Attorney General discovered that Bitfinex (Tether's sister exchange) had misappropriated $850 million from Tether's reserves to cover losses suffered by a payment processor when funds were seized by authorities. Tether reached an $18.5 million settlement. The CFTC also fined Tether $41 million for making false statements during a period when USDT was not "fully backed." Tether's website had at one point quietly changed its statement from "100% backed by the US dollar" to "100% backed by our reserve assets, which may include affiliated entities."

Regarding the auditing issue specifically, Ardoino was more candid, but also more defensive, than most media reports suggested. In an interview with CNBC, when pressed on why no Big Four accounting firms were auditing Tether, he admitted, "They haven't even started looking at our numbers." He attributed this delay to "reputational risk" created by the previous US administration, making large accounting firms cautious about getting involved in the cryptocurrency space. He then shifted his focus, pointing out that Silicon Valley Bank, Silvergate, Credit Suisse, and Wirecard all received clean audit reports before their collapses.

In early 2025, Tether hired a new CFO from LetterOne specializing in "controversial audits," indicating that they were building talent reserves in preparation for eventually bringing in the Big Four auditors. However, the word "eventually" carries significant weight in this statement.

Tether's cash and bank deposits are close to zero. The Q1 2025 audit report showed $64 million in cash (0.04% of total assets). U.S. Treasury bonds are the most liquid assets on Earth, and Cantor Fitzgerald can close positions on the same day. This poses a risk because, in the event of severe stress, Tether needs the U.S. Treasury market to function normally, and Cantor to execute trades quickly.

In 2022, coordinated short sellers triggered $7 billion in USDT redemptions within 48 hours and $25 billion within 20 days. Tether honored every redemption. But at that time, the circulating supply of USDT was $80 billion. Now, the circulating supply has reached $186 billion, and this stress test has never truly been conducted.

S&P Global will downgrade Tether's stability rating to its lowest level (5) by the end of 2025, citing Tether's rising exposure to high-risk assets (Bitcoin, gold, corporate bonds, and secured loans), which now accounts for 24% of its reserve assets, up from 17% a year ago. Ardoino's public response was: "We are proud of your disgust." As for how to interpret this statement, that's up to the reader.

USA₮: American Chess Game

On January 27, 2026, Tether launched USA₮, a federally regulated, US dollar-denominated stablecoin. The product's structure is designed to comply with the GENIUS Act (signed into law on July 18, 2025), although the Act's implementation timeline is phased and a complete regulatory framework is still under construction.

USA₮ is issued by Anchorage Digital Bank, the first federally chartered crypto bank in the United States, regulated by the Office of the Comptroller of the Currency (OCC). Cantor Fitzgerald serves as the reserve custodian and preferred primary dealer. Bo Hines, former executive director of the President's Digital Assets Advisory Council (White House Crypto Council), is currently the CEO of Tether USA₮, headquartered in Charlotte, North Carolina.

This is not Tether adding a new label to USDT. USA₮ is a structurally independent product with a different issuer, a different regulatory framework, and different reserve requirements. Anchorage and Cantor are shareholders in this US entity and will participate in revenue sharing, although the specific economic terms have not yet been disclosed.

Its strategic logic is divide and conquer. USDT remains an offshore product, issued in El Salvador, serving hundreds of millions of users globally, especially in emerging markets. USA₮, on the other hand, is an onshore product designed specifically for settlement by U.S. institutions and issued by nationally chartered banks under federal regulation.

In an interview, Bo Hines described the relationship as "reciprocal," adding, "At the end of the day, it's all about Tether." However, the two products face vastly different competitive landscapes.

In the US, Ardoino predicts a "race to the bottom" phenomenon in stablecoin profitability. As bank-issued stablecoins enter the market under the GENIUS Act, they will compete by sharing yields with holders, effectively becoming tokenized money market funds. USA₮ cannot win on profit margins. It must win on programmability, institutional services, and Tether's channel advantages.

In the offshore market, USDT faces virtually no competition at its price point (zero return for holders) because its users have few better options. The product itself is a stable US dollar. This is an unshakeable monopoly.

Hines also believes that the U.S. Treasury will eventually establish "reciprocity standards" under the GENIUS Act, enabling offshore USDT to gain legal recognition in the U.S. market. Tether is operating two structurally independent businesses under the same brand.

A rarely stated pessimistic argument is that by launching a highly regulated, transparent U.S. product, Tether is implicitly acknowledging that offshore USDT does not meet the same standards. If institutional markets begin to view these two products as substitutes for each other's reputation, the lack of transparency surrounding USDT could potentially have a ripple effect across the USA₮.

Enterprises group with stablecoin engine at its core

At first glance, Tether's investment portfolio might seem like a bunch of random bets. But that's not the case.

Tether's proprietary investment arm manages over $20 billion in funds (separate from USDT reserves and derived from profits and excess capital). Ardoino stated in July 2025 that they had invested in over 120 companies. Recent investment deployments include: a $200 million investment in Whop (an internet marketplace platform with 18.4 million users), a $150 million investment (12% stake) in Gold.com, a $100 million investment in Anchorage Digital, a $50 million investment in Eight Sleep, and smaller investments in LayerZero, Ark Labs, and Axiym.

As Ardoino explained, the central theme running through it all is what he calls the concept of a "stable company." The four pillars are: stablecoin (USDT), stable communications (Keet, a peer-to-peer messaging application), stable energy (solar charging stations in Africa, Bitcoin mining), and stable intelligence (QVAC, a decentralized artificial intelligence platform).

Stripped of its branding, this is essentially a distribution strategy disguised as a corporate group. Each investment is seen as a channel to further embed USDT into global commerce. Whop's 18.4 million users gained integration support with WDK (Tether's wallet development kit). Rumble's 51 to 70 million users received a native wallet supporting Bitcoin, USDT, USA₮, and Tether Gold. In mid-March, USA₮ held a brand promotion event in Times Square, where 25,000 people scanned a QR code to download the Rumble wallet and received $10 worth of USA₮.

This is how the Tether ecosystem actually works: portfolios fund distribution channels, which in turn continuously bring in stablecoin users.

Just a few months ago, the conglomerate's narrative shifted. Tether is no longer just writing checks and integrating wallets. It is taking over operational control.

In 2025, Tether acquired a 70% controlling stake in Adecoagro, a major South American agricultural company. They completely restructured the board, appointing Juan Sartori (Tether's head of special projects) as executive chairman (the intention couldn't be clearer). This wasn't a venture capital investment; it was an acquisition of a publicly traded agricultural conglomerate.

This pattern is currently being repeated. Following its $150 million investment in Gold.com in February, Tether secured a board seat, with Sartori appointed to the board on March 16. They also hold a minority stake in Juventus Football Club and recently acquired a 30.4% stake in Italian media company Be Water. In each case, the path is the same: investment, board seat acquisition, and then exerting operational influence.

Most unusually, Tether has been acquiring a network of grocery stores, top-up kiosks, and prepaid phone top-up shops across Latin America, Africa, and Asia. These are the physical locations where local residents traditionally purchase prepaid mobile phone credit. By owning this infrastructure, Tether effectively controls the gateway from cash to cryptocurrency in emerging markets, completely bypassing the banking system. This control over physical channels is a very interesting strategy, building a wider moat for Tether.

Whether you see all of this as a visionary infrastructure move or overexpansion depends on whether you believe a 300-person company is capable of managing a massive $20 billion portfolio—spanning stablecoins, gold, Bitcoin mining, artificial intelligence, robotics, brain-computer interfaces, sleep technology, agriculture, a football club, a media company, and a video platform.

Ardoino stated in an interview that Tether provides funding and access, allowing portfolio companies to operate independently. However, the board takeover of Adecoagro and the appointment of Sartori tell a different story. It increasingly resembles an operational conglomerate centered around a stablecoin engine, rather than a strategic investment fund. This week's announced change of leadership (Richard Heathcote transitioning to an advisory role, replaced by his deputy Zachary Lyons) indicates that the investment business is maturing and requires not less, but more institutionalized structure.

Tether's platform products

Regardless of how its token itself changes, the underlying infrastructure products are the key to making Tether's technology sticky.

WDK (Wallet Development Kit) : An open-source, non-custodial wallet infrastructure. Its strategic goal is to become the default financial layer for all connected devices. Ardoino's most concrete example is a smart refrigerator storing $50 in USDT, managing its own food budget, and autonomously making payments (yes, he's serious). On a more practical level, WDK has already integrated with Whop and is being built into the Rumble wallet. Its most interesting feature is cross-chain routing: the algorithm automatically transfers a user's USDT to the blockchain with the lowest current transaction fees, forcing Layer 1 public chains to compete on cost for Tether's transaction volume.

QVAC: Tether's decentralized artificial intelligence platform, launched in May 2025, already has the following products: Genesis I (a synthetic dataset of 41 billion tokens for AI training in STEM fields), QVAC Workbench (a local AI application supporting local model inference on mobile and desktop), and QVAC Health (a privacy-focused health application that aggregates wearable device data without sending any data to the cloud). Its SDK supports running Llama, Qwen, and Whisper models entirely on-device. No user adoption data has been released yet.

Hadron: Tether's tokenization platform, launched in November 2024. It supports the issuance of USA₮ tokens and the tokenization of stocks, bonds, commodities, and funds. Integrations with Chainalysis and Crystal Intelligence provide it with institutional-grade compliance tools. A strategic partnership agreement reached in November 2025 with KraneShares and Bitfinex Securities aims to tokenize exchange-traded products. However, similar to QVAC, no adoption data has been released beyond Tether's own products.

Keet / Holepunch: A peer-to-peer messaging application based on a refactored BitTorrent architecture. It requires no servers and has no centralized infrastructure. Ardoino claims that a chat room called "Keet News" can support over 12,000 daily active users streaming media with zero servers. Because there is no infrastructure to maintain, he believes the application could theoretically scale to a billion users, while Tether's costs are virtually zero.

These platform products are real (the code is open source, the applications are downloadable, and the SDK is documented). However, none of them have independent user data, revenue figures, or third-party verification. Everything I can verify comes from Tether's own announcements. The platform layer is a bet on the future, not a proven source of revenue. The question is whether the integration of WDK with Whop (18.4 million users) and Rumble (51 to 70 million users) can lead to genuine user adoption.

risk

Interest rate sensitivity is already reflected in the data. The continued decline in Federal Reserve interest rates will directly compress Tether's core revenue. The hedging of gold and Bitcoin has partially offset this impact, but it has also introduced new volatility (gold fell 20% in three days during a sell-off in January 2026).

Dependence on TRON: Approximately 44% of the USDT supply (around $82 billion) is distributed on the TRON chain. This chain dominates retail transfers, processing about 65% of USDT transactions under $1,000. Tether's solution is WDK's cross-chain routing functionality, but until this functionality is widely adopted, the risks associated with this concentration remain real.

Audit gaps remain: institutional investors will question all other information until the Big Four accounting firms release their full audit reports. Hiring a CFO with experience in "controversial audits" suggests that Tether indeed intends to do so.

The competitive landscape between Tether and Circle is more nuanced than either side is willing to admit. Based on adjusted trading volume, USDC will surpass USDT for the first time since 2019 in 2026. Visa's on-chain analytics data confirms this reversal: USDT's share of stablecoin trading volume will decline from 87% in 2019 to 36% in 2026, while USDC will rise from 13% to 64%.

Institutions, AI agents, payment service providers, and DeFi protocols are all choosing USDC. Circle is listed on the New York Stock Exchange and has a clear regulatory status in the United States. In 2025, the supply of USDC grew by 73%, while USDT grew by 36%.

However, the reversal in trading volume does not pose a threat to Tether's profits. Circle cedes approximately 60% of its revenue to distribution partners (Coinbase alone earned over $900 million in 2024). Tether has its own organically grown distribution network and is now further expanding through acquisitions of entities (grocery stores, recharge kiosks, Rumble, Whop).

Tether generated over $10 billion in profits in 2025. Circle's total revenue in 2024 was approximately $1.7 billion. USDC is the product chosen by institutions, while USDT is the product responsible for printing money. They are playing completely different games, and Tether's game is an order of magnitude more profitable.

Of course, there's also the question about conglomerates: a company that simultaneously manages $190 billion in stablecoin reserves, acquires football clubs, invests in brain-computer interfaces, builds AI platforms, and operates solar-powered charging stations in Africa—is this enhancing resilience or creating opportunities for operational failures?

Stablecoin infrastructure

If you operate in emerging markets, USDT remains the absolute dominant settlement instrument denominated in US dollars. Its distribution network (estimated at over 550 million users, physical deposit channels, and exchange integration) is unparalleled.

If you are a US-based institution, USA₮ offers a pathway to the Tether ecosystem through a federally regulated vehicle. However, it is still in its early stages and directly competes with USDC's established institutional relationships. The current reason for choosing USA₮ over USDC is Tether's global liquidity network; the reason for not choosing it is Circle's longer compliance track record.

If you're a bank considering issuing your own stablecoin, Bo Hines' observation hits the nail on the head: "Banks are starting to realize that issuing their own stablecoin might not be a good idea, given that other banks don't want to use their own products for settlement." Only neutral, unbiased existing players can win the game of interbank settlements. That's exactly where Tether stands.

If you focus on the platform layer (Hadron, WDK, QVAC), the honest assessment is that these are early-stage infrastructure bets with real technology behind them, but they haven't yet had a significant impact.

In 2026, Tether's most suitable counterpart may no longer be Circle or Paxos. It may be closer to a combination of Berkshire Hathaway (which invests in diversified conglomerates with yield-generating float and retains 95% of its profits) and Visa (a settlement track used by all participants because of its neutrality and ubiquity).

When I started writing this article, I thought I was just writing a story about stablecoins. But in the end, I wrote the story of a company that is trying to build a parallel financial infrastructure for the half of the world forgotten by the existing financial system. The issue of reserves certainly exists. But the ambition of this company, and the speed at which it has implemented it with only 300 people and zero external capital, is something I have never seen before in this field.

If Tether ultimately achieves half of the vision envisioned by Paolo Ardoino, then other players in the industry will have to spend the next decade catching up.