KPMG U.S. issued an unqualified opinion on Tether International's 2025 financial statements on August 13, 2026, marking the first time the $183 billion USDT issuer has undergone a full financial-statement audit by a Big Four accounting firm. The audited statements showed reserves exceeding liabil...
"For years, some detractors said an audit of Tether could not be completed. We proved ourselves many times." — Paolo Ardoino, CEO, Tether
KPMG U.S. issued an unqualified opinion on Tether International's 2025 financial statements on August 13, 2026, marking the first time the $183 billion USDT issuer has undergone a full financial-statement audit by a Big Four accounting firm. The audited statements showed reserves exceeding liabilities by $6.814 billion at year-end 2025, with roughly 80% of reserves held in U.S. Treasuries and reverse repurchase agreements.
The milestone arrives at an inflection point. The GENIUS Act, signed into law in July 2025, requires issuers with more than $50 billion in outstanding stablecoins to submit PCAOB-standard audited annual financial statements. Tether's KPMG engagement satisfies that threshold on paper, but federal regulators missed the July 18, 2026 deadline to finalize implementing rules. Meanwhile, Tether's quarterly BDO attestation for Q2 2026 showed the excess reserve buffer had fallen 40% to $4.11 billion, raising questions about whether the clean audit of December 2025 data still reflects current conditions. And in Europe, MiCA enforcement has locked USDT out of EU-regulated exchanges entirely.
This report examines the audit's scope, what it covers and what it does not, the regulatory gap it was designed to fill, and the reserve dynamics that complicate the transparency narrative.
KPMG U.S. conducted the audit in accordance with AICPA standards, covering Tether International's financial statements for the fiscal year ended December 31, 2025. The engagement resulted in an unqualified opinion — the highest form of audit conclusion — meaning the financial statements present fairly, in all material respects, the financial position and results of operations of the company.
Tether announced the engagement in March 2026. The Financial Times subsequently identified the auditor as KPMG. The audit covered $184 billion in USDT backing at year-end 2025 and examined transactions, systems, ownership records, valuations, counterparties, and underlying evidence. KPMG physically counted and inspected every individual gold bar held by Tether, verifying existence and identifying information rather than relying solely on custodian reports.
This represents a significant upgrade from Tether's prior disclosure regime. Since 2022, Tether has published quarterly reserve attestations prepared by BDO Italia. Attestations verify reserve balances at a single point in time. A full financial-statement audit, by contrast, examines internal controls, related-party transactions, revenue recognition, and the broader financial architecture of the entity. The evidentiary standard is materially different.
However, the audit covers only Tether International, the entity that issues USDT. Tether's corporate structure includes multiple entities across jurisdictions, and the audit scope does not extend to the consolidated group. The KPMG opinion covers one legal entity's financials for one fiscal year.
The audited year-end 2025 reserve breakdown, supplemented by Tether's own disclosures, shows the following allocation:
| Asset Class | Amount | Share | |---|---|---| | U.S. Treasuries (direct) | $122B | ~63% | | Overnight reverse repos & money market | $19B | ~10% | | Gold | $17.4B | ~9% | | Secured loans | $14.6B | ~8% | | Bitcoin | $8.4B | ~4% | | Other investments | $3.9B | ~2% | | Corporate bonds | $14.7M | <0.01% | | Total excess reserves (buffer) | $6.814B | — |
Tether's direct U.S. Treasury exposure of $122 billion, rising to $141 billion when including reverse repos, places it among the 20 largest holders of U.S. government debt globally. For context, that is larger than the sovereign holdings of several G20 nations. Tether's 2025 net profit exceeded $10 billion, driven primarily by interest income on these Treasury holdings — though this represented a 23% decline from the roughly $13 billion reported in 2024.
The gold allocation of $17.4 billion backs Tether's separate XAUT token. By March 2026, gold holdings had grown to approximately 707,747 fine troy ounces, up from 520,000 ounces at year-end 2025. The $14.6 billion in secured loans and $3.9 billion in other investments remain the least transparent portions of the reserve. The KPMG audit examined these as part of the financial statements, but detailed counterparty and maturity breakdowns have not been published.
The clean audit opinion applies to December 31, 2025. Six months later, the picture had shifted. BDO's Q2 2026 attestation showed excess reserves had fallen to $4.11 billion — down from $6.814 billion at year-end 2025 and $8.23 billion at the end of Q1 2026.
That is a 40% decline in buffer relative to the audited period and a 50% decline from the Q1 2026 peak.
Tether reported Q2 2026 net operating profit of $1.5 billion, up from $1.04 billion in Q1. The buffer decline was not driven by operating losses. According to Tether's disclosures, contributing factors included a $2.38 billion reduction in secured lending and market volatility affecting gold and Bitcoin positions. Tether has not published a full line-item reconciliation accounting for the remaining decline, per reporting from Ledger Insights.
The divergence between operating profitability and buffer erosion raises structural questions. Tether's reserves include volatile assets — Bitcoin and gold — whose price movements can compress or expand the buffer independently of business operations. A stablecoin issuer whose excess reserves fluctuate by $4 billion in a quarter due to commodity and crypto prices faces a different risk profile than one holding 100% short-dated government securities.
Tether's audit arrives in a bifurcated regulatory environment. Two major jurisdictions have enacted stablecoin-specific legislation. Neither has yet settled on how issuers like Tether fit.
United States — GENIUS Act: Signed July 18, 2025, the GENIUS Act requires issuers with more than $50 billion in outstanding stablecoins to submit annual financial statements audited to PCAOB standards, publish monthly CEO/CFO-certified reserve reports, and maintain full reserve backing. Tether's KPMG engagement would satisfy the annual audit requirement. However, the six federal agencies charged with finalizing implementing rules missed the statutory one-year deadline on July 18, 2026. Ten proposed rules were published but none finalized. Full operational enforcement is expected to begin January 2027, according to regulatory guidance. Comment periods on several proposals, including a joint customer identification program rule, extend to August 21, 2026.
European Union — MiCA: Under MiCA, stablecoins pegged to fiat currencies are classified as "e-money tokens" (EMTs), and issuers must be EU-authorized credit institutions or electronic money institutions. Significant EMT issuers must hold 30-60% of reserves in EU bank deposits. Tether, incorporated in the British Virgin Islands and operating from El Salvador, never applied for MiCA authorization. CEO Ardoino has argued that the EU deposit requirement would expose the company to bank-failure risk, citing the SVB-driven USDC depeg in March 2023 as a cautionary example. Tether holds approximately 80% of reserves in U.S. Treasuries instead.
The consequence: USDT has been delisted from EU-regulated exchanges. Coinbase Europe removed the token in December 2024, Crypto.com followed in January 2025, and Binance restricted European USDT trading pairs in March 2025. According to Kaiko data, USDT trading volume on EU venues fell more than 70% between Q4 2024 and Q2 2025, while USDC volume on the same venues nearly doubled. Circle's USDC and EURC, authorized under MiCA via a French Electronic Money Institution license, inherited the regulated European market by default.
The KPMG audit narrows but does not close the transparency gap between USDT and USDC. According to stablecoin transparency analyses published in 2026:
| Metric | Tether (USDT) | Circle (USDC) | |---|---|---| | Full financial audit | KPMG (2025 only) | Deloitte (annual since FY2022) | | Reserve attestation | BDO Italia, quarterly | Deloitte, monthly | | Reserve updates | Quarterly | Weekly | | SEC filings | None | Daily (via BlackRock Circle Reserve Fund) | | Security-level detail | Category-level | CUSIP-level | | MiCA authorization | None | Authorized (France) | | S&P Global rating | Not rated | "2 (Strong)" (Dec 2025) |
Circle's disclosures show approximately 88% of USDC reserves in the Circle Reserve Fund, a BlackRock-managed Rule 2a-7 government money market fund whose holdings are published daily on BlackRock's website. Circle also provides weekly reserve updates and monthly Deloitte attestations, in addition to annual audited financial statements.
Tether's KPMG audit is a single-year engagement covering 2025. The company has not disclosed whether KPMG will audit subsequent years. Quarterly attestations continue to be prepared by BDO Italia, operating on a different cadence and standard than a full audit. The gap between annual audited data (December 2025) and current reserve conditions (Q2 2026 shows a $4.1B buffer, down 40%) illustrates the limitation of point-in-time audit snapshots for a $183 billion instrument.
Several material questions remain outside the scope of the KPMG engagement:
Consolidated group financials. The audit covers Tether International only. Tether's broader corporate structure, including entities involved in investments, operations, and the company's growing portfolio of non-stablecoin businesses, falls outside the scope.
Forward-looking compliance. The KPMG opinion speaks to 2025 financial statements. It does not address Tether's compliance posture under the GENIUS Act's incoming requirements or MiCA's existing framework. As CryptoSlate noted, Tether obtained the audit critics demanded "just as Washington changed the test."
Counterparty detail on secured loans. The $14.6 billion in secured loans at year-end 2025, reduced to approximately $12.2 billion by Q2 2026, remains the least transparent asset class in the reserve. Borrower identities, collateral types, and maturity profiles are not publicly disclosed.
The buffer decline. The roughly $4 billion reduction in excess reserves between year-end 2025 and Q2 2026 has not been fully reconciled in public disclosures. Market volatility and reduced lending account for some of the movement, but the full composition of the decline is not itemized.
KPMG U.S. issued an unqualified opinion on Tether International's 2025 financials on August 13, 2026 — the first Big Four audit in Tether's history. Reserves exceeded liabilities by $6.814 billion at year-end 2025.
The audit covered one entity (Tether International) for one year (FY2025). It does not extend to consolidated group financials, forward regulatory compliance, or current reserve conditions.
Tether's excess reserve buffer fell 40% from $6.814 billion (Dec 2025) to $4.11 billion (Q2 2026), driven by gold and Bitcoin price declines and a $2.38 billion reduction in secured lending. A full reconciliation has not been published.
The GENIUS Act requires PCAOB-standard audited financials for issuers above $50 billion. Tether's KPMG engagement satisfies this on paper, but implementing rules remain unfinalized after regulators missed the July 2026 deadline.
USDT remains locked out of EU-regulated exchanges under MiCA. Trading volume on EU venues fell over 70% between Q4 2024 and Q2 2025. USDC inherited the regulated European market.
Transparency benchmarks still favor Circle's USDC, which publishes monthly Deloitte attestations, daily SEC filings via BlackRock, and has maintained annual audits since FY2022. Tether's engagement with KPMG narrows but does not close this gap.
Tether's first Big Four audit resolves a long-standing criticism. For years, the absence of a full financial-statement audit from a major accounting firm was the primary ammunition for USDT skeptics. That argument is now weaker. KPMG's unqualified opinion on 2025 financials provides a level of third-party assurance that quarterly attestations could not.
The audit does not, however, resolve the structural tensions surrounding the world's largest stablecoin. A $4 billion buffer decline in six months, opaque secured lending positions, a MiCA-driven exit from Europe, and an unfinished U.S. regulatory framework all remain open questions. The audit is backward-looking by design. Its value depends on whether Tether sustains the engagement annually and whether regulators finalize rules that make such audits mandatory and standardized.
For the $183 billion USDT market, the KPMG opinion is a necessary condition for institutional credibility. It is not a sufficient one. The next data point — whether Tether engages KPMG for FY2026 and how the GENIUS Act's January 2027 enforcement deadline shapes disclosure requirements — will determine whether this audit was a turning point or a one-time event.