Tether, issuer of the $185 billion USDT stablecoin, announced on March 24, 2026, that it has engaged KPMG to conduct its first full financial audit and hired PwC to prepare internal systems. The engagement marks a departure from the quarterly attestations previously provided by BDO Italia, which ...
"Tether's mission has always been to build trust through action, not promises." — Paolo Ardoino, CEO, Tether
Tether, issuer of the $185 billion USDT stablecoin, announced on March 24, 2026, that it has engaged KPMG to conduct its first full financial audit and hired PwC to prepare internal systems. The engagement marks a departure from the quarterly attestations previously provided by BDO Italia, which offered only point-in-time snapshots of reserve balances without expressing a formal audit opinion.
The timing is not coincidental. The GENIUS Act, signed into law on July 18, 2025, requires stablecoin issuers with more than $50 billion in outstanding tokens to publish audited annual financial statements within 120 days of fiscal year-end. Tether, with approximately $187 billion in USDT circulation, is the single largest entity subject to this threshold. The move also follows S&P Global's November 2025 downgrade of USDT to a "weak" stability rating — the lowest on its 1-5 scale — citing Tether's rising exposure to high-risk reserve assets.
Tether reported $10 billion in net profit for 2025 and holds $141 billion in U.S. Treasury exposure. It launched a separate U.S.-regulated stablecoin, USAT, in January 2026 via Anchorage Digital Bank, and attempted to raise $15-20 billion at a reported $500 billion valuation — a round later scaled back to approximately $5 billion after investor pushback. The KPMG audit is the linchpin of Tether's bid to operate within U.S. regulatory boundaries while defending its 60.7% share of the $318 billion global stablecoin market.
Tether's previous transparency regime consisted of quarterly attestations from BDO Italia, a mid-tier Italian accounting firm. These attestations followed agreed-upon procedures that confirmed asset existence at a single point in time. They did not constitute an audit opinion. They did not test internal controls. They did not examine how Tether records and reports figures over time.
A full-scope KPMG engagement is fundamentally different. The auditor will independently examine Tether's complete reserve structure — U.S. Treasuries, cash equivalents, gold, Bitcoin, secured loans, corporate bonds, and tokenized liabilities issued across multiple blockchains. KPMG will test internal controls, provide substantive evidence, and issue a formal opinion on whether Tether's financial statements are presented fairly in accordance with recognized accounting standards.
PwC has been separately engaged to prepare Tether's internal systems for audit readiness. The dual engagement of two Big Four firms signals the scale and complexity of the exercise. No official timeline for completion has been announced, but audits of this complexity for large financial entities typically take six to twelve months.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) became law on July 18, 2025, after passing the Senate 68-30 and the House 308-122. It established the first federal regulatory framework for payment stablecoins in the United States.
Key provisions relevant to Tether:
With $187 billion in outstanding USDT, Tether exceeds the $50 billion audit threshold by a factor of 3.7. There is no ambiguity about whether the Act applies.
The OCC issued proposed implementation rules in March 2026, according to Sullivan & Cromwell, further clarifying compliance procedures for regulated stablecoin issuers, including those operating through federal banking entities.
According to Tether's own attestation reports for 2025, the company's reserve portfolio breaks down as follows:
| Asset Category | Value | % of Reserves | |---|---|---| | U.S. Treasuries (direct) | $122B+ | ~65% | | Reverse repo agreements | ~$19B | ~10% | | Cash and bank deposits | Undisclosed | — | | Gold | $17.4B | ~9% | | Bitcoin | $8.4B | ~4.5% | | Secured loans, corporate bonds, other | ~$19B | ~10% | | Total reserve assets | ~$186.5B | |
The combined Treasury and reverse repo exposure of $141 billion represents the highest-quality portion of the reserve. However, S&P Global calculated that high-risk assets — defined as Bitcoin, gold, secured loans, and corporate bonds — now account for 24% of Tether's reserves backing $174.4 billion in circulating USDT, up from 17% the prior year.
Tether's $6.3 billion in excess reserves (assets above 1:1 backing) provides a buffer. But S&P's analysis noted that a significant decline in Bitcoin prices could erode this buffer and create potential undercollateralization. At current Bitcoin prices near $67,000, the $8.4 billion Bitcoin position represents approximately 125,000 BTC.
Separately, Tether maintains a $20 billion investment portfolio that it classifies as distinct from reserve assets. The audit's treatment of the boundary between reserve and non-reserve holdings will be a critical element of the engagement.
On November 26, 2025, S&P Global Ratings downgraded USDT's stability assessment from "constrained" to "weak," the lowest tier on its 1-5 scale. The agency cited:
Tether disputed the assessment, calling S&P's framework a "legacy" model that "fails to capture the nature, scale, and macroeconomic importance of digitally native money." HSBC subsequently published a note reinforcing S&P's de-pegging risk warning, according to CoinDesk.
The downgrade had measurable effects. USDT's share of the global stablecoin market declined from 71.1% to 59.9% in North America over the following months, according to CoinDesk's stablecoin landscape report. Institutional allocators increasingly shifted toward issuers with stronger transparency credentials.
On January 27, 2026, Tether launched USAT (USA₮), a separate dollar-backed stablecoin designed specifically for the U.S. market. USAT is issued by Anchorage Digital Bank under OCC supervision and was built for GENIUS Act compliance from inception.
Key structural differences between USDT and USAT:
Bo Hines, former Executive Director of the White House Crypto Council, was appointed CEO of Tether's U.S. operations and heads USAT from Charlotte, North Carolina. The hire raised eyebrows given Hines's recent government role in shaping the very regulatory framework USAT is designed to comply with.
The two-token structure allows Tether to maintain USDT's global circulation — particularly in emerging markets where it functions as a de facto dollar savings instrument — while building a parallel, compliant channel for U.S. institutional flows. Whether the KPMG audit will cover both USDT and USAT reserves, or USDT alone, has not been publicly clarified.
The stablecoin market reached $318 billion in total capitalization in early 2026, according to multiple tracking sources. USDT leads with $187 billion (60.7%), but the competitive landscape is shifting:
| Stablecoin | Issuer | Market Cap | 2026 YTD Supply Change | |---|---|---|---| | USDT | Tether | $187.0B | -$2.0B | | USDC | Circle | $75.7B | +$4.5B | | PYUSD | PayPal | $3.6B | Growing | | RLUSD | Ripple | $1.0B+ | Surpassed $1B in first year |
USDC posted a net supply increase of $4.5 billion through March 2026, while USDT recorded a net decline of approximately $2 billion. According to Citigroup, stablecoin rewards restrictions under the GENIUS Act could slow USDC's growth but not halt it. Citigroup projects the total stablecoin market reaching $1.9 trillion by 2030 in its base case, or $4.0 trillion in a bull scenario.
The directional trend is clear: in jurisdictions where regulatory compliance matters — the U.S., Europe under MiCA, and increasingly Asia-Pacific — market share is migrating toward audited, transparently-backed issuers.
In September 2025, Tether announced plans to raise $15-20 billion via private placement at a reported $500 billion valuation. The round was subsequently scaled back to approximately $5 billion after prospective investors questioned both the deal size and valuation relative to comparables like SpaceX and ByteDance, according to the Financial Times.
CEO Paolo Ardoino described the larger figures as a "misconception," calling the $15-20 billion range a ceiling rather than a target. The episode highlighted the tension between Tether's $10 billion annual profit — which would place it among the most profitable financial companies globally — and persistent investor wariness about governance, regulatory risk, and reserve opacity.
A clean KPMG audit opinion would likely reset institutional perceptions. The absence of one, or a qualified opinion, could have the opposite effect.
Tether has announced audit plans before. In 2017, the company retained Friedman LLP; the engagement ended without a completed audit. In 2021, the New York Attorney General fined Tether $18.5 million for misrepresenting reserve backing, finding that "for periods of time, [Tether] held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations."
The NYAG settlement required Tether to cease operations in New York and publish quarterly reserve reports for two years. Tether admitted no wrongdoing under the settlement terms.
Given this history, the market is likely to reserve judgment until KPMG delivers a formal, unqualified opinion. The audit's credibility will depend on KPMG's independence, the scope of its engagement, and whether its findings are published in full rather than summarized.
The KPMG engagement is the most consequential transparency event in Tether's 12-year history. It arrives not as a voluntary gesture but as a regulatory requirement under a law that passed with bipartisan supermajorities. Whether Tether emerges with a clean opinion that validates its $10 billion profit engine, or faces qualified findings that expose reserve management concerns, will shape the competitive dynamics of a stablecoin market projected to grow to nearly $2 trillion by decade's end.
The underlying economics are straightforward: Tether earns approximately $10 billion annually by holding user deposits in U.S. Treasuries and other yield-bearing assets while paying depositors nothing. It is, in effect, a money market fund that distributes no yield. The audit will determine whether the $185 billion of someone else's money entrusted to this structure is managed with the controls and transparency that an obligation of that size demands.
The market is not waiting for the answer. Capital is already moving toward audited alternatives.