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Stablecoin issuer Tether says the long-awaited audit of its reserve assets is officially underway, just as its controversial loans to a U.S. cabinet member are coming under greater Congressional scrutiny.
- Tether posts Q1 profit despite BTC, gold price declines
- Tether’s Lutnick loans prompt Senate scrutiny
- Tether pimps XXI–Strike–Elektron three-way
- Latin American stablecoin market misconceptions
- Brazil mulls ban on foreign-issued non-real stablecoins
On May 1, Tether released its Q1 ‘attestation’ of the reserves backing the $183.5 billion in circulating USDT as of March 31. The report, a one-day snapshot of Tether’s reserves that makes no claim as to what the reserves looked like the day before or after March 31, was conducted as usual by BDO Italia.
Tether claims to have nearly $191.8 billion in total assets, giving it $8.2 billion in ‘equity’ over and above its liabilities. This is nearly $1.9 billion higher than Tether reported as of December 31, 2025, thanks to $1.04 billion in Q1 ‘profits’ and another $854 million in ‘net capital movements.’
Tether claims the bulk of its reserves continue to be held in U.S. Treasury bills, with $117 billion in direct exposure, down from $122.3 billion at the end of Q425. Tether claims $141 billion in ‘direct and indirect exposure’ to T-bills once you add $19.3 billion in overnight reverse repurchase agreements (effectively unchanged from Q4) and $4.7 billion in term reverse repurchase agreements (down from $5.5 billion). Meanwhile, Tether’s modest cash pile more than tripled to $107 million.
As for its non-cash/equivalent assets, Tether’s stack of gold bricks saw its value fall by nearly $2.4 billion to $19.8 billion. Similarly, the value of Tether’s BTC tokens fell by $1.8 billion to $6.6 billion and its controversial ‘secured loans’ (more on these below) declined by $1.2 billion to $15.8 billion.
Meanwhile, Tether’s ‘other investments’ category grew by $2 billion to $4.8 billion, while a new category called ‘public equities’ (defined as “indirect gold, bitcoin and other asset exposure”) added $3.4 billion.
Tether CEO Paolo Ardoino claimed the Q1 profit demonstrated that USDT “works without compromise,” a reference to the dramatic swoons in the value of both BTC and gold during the first three months of 2026.
Ardoino noted that USDT’s market cap has grown by $6 billion since the end of March, “reflecting sustained demand” in the token that plays a dominant role in digital asset exchange trading pairs. (BTC’s fiat price has risen 17.6% over the same period.)
The Q1 report could prove the final attestation performed by BDO Italia, which has been providing Tether’s bare-bones attestations for the past four years. Tether said last week that the first-ever third-party audit of its reserves has “formally commenced,” possibly signaling that Tether’s Q2 figures could be the first to be subjected to scrutiny beyond the one-day snapshot that BDO Italia (and its five predecessors since 2017) provided.
In March, Tether announced that it had hired a ‘big four’ accounting firm to conduct its “first full independent financial statement audit.” The Financial Times then reported that KPMG will be the belle of this ball, with a second ‘big four’ firm (PwC) enlisted to help Tether “ready its internal systems for the audit.”
Meanwhile, Tether also found time to release a Q1 attestation for Tether Gold (XAUT), which held nearly 708,000 troy ounces of the shiny stuff as of March 31, up from 520,000 three months prior. Each ounce is represented by one XAUT, of which 559,600 have been sold, leaving just over 148,000 tokens available.
Lutnick loans under the microscope
Getting back to Tether’s loans, two U.S. senators recently asked Commerce Secretary Howard Lutnick for details on the loan Tether reportedly provided to a trust benefiting Lutnick’s children last year. The timing of the loan, first disclosed in March by Bloomberg, coincided with Lutnick selling his multi-billion-dollar stake in Cantor Fitzgerald (NASDAQ: ZCFITX), the Wall Street firm Lutnick founded, after assuming the Commerce position.
Lutnick sold his assets to trusts that benefit his children, and one of these trusts (Dynasty Trust A) borrowed an undisclosed sum from Tether. Over the course of 2025, Tether’s ‘secured loans’ category ballooned from $5 billion to $17 billion, despite the company’s 2022 pledge to eliminate these assets from its balance sheet.
Cantor allegedly custodies Tether’s T-bills, although Lutnick’s assertions on this subject appear far less confident when he’s testifying under oath. Cantor also “owns a convertible bond with Tether” equal to a 5% stake in the stablecoin firm. That stake was valued at $600 million in April 2024 but could be worth up to $25 billion if Tether’s bid to raise funds at a valuation of $500 billion proves successful.
In an April 29 letter to Lutnick, Senators Elizabeth Warren (D-MA) and Ron Wyden (D-OR), the ranking members of the Banking and Finance committees, respectively, said the reports of Tether’s loans to Lutnick “raise serious questions about your relationship with Tether, and the company’s influence on your policy decisions. We want to ensure that Tether has not sought to bribe or otherwise exert control or influence over you.”
The senators sent a similar letter to Tether’s Ardoino, asking him to provide “the credit document” related to the Lutnick loan. Ardoino was also asked to clarify “what, if anything, did Secretary Lutnick or his family promise Tether, either explicitly or implicitly, in exchange for the loan?” The senators also wish to know if this loan is included in Tether’s reserve assets.
The letters note that Tether received favorable treatment via the GENIUS Act, the stablecoin-focused legislation that Tether lobbied for and became law last summer. Under GENIUS, foreign-issued stablecoins were given a three-year grace period to become compliant—which in Tether’s case would mean limiting its reserves to T-bills and other cash equivalents—while GENIUS also allowed noncompliant tokens to continue circulating on decentralized exchanges (DEXs).
The letters sought responses from both parties by May 13, but don’t hold your breath. With Dems in the minority and the Republican leadership of both Senate committees unlikely to force a Trump-appointed cabinet member to respond, these letters are (sadly) performative. But that could change should Dems retake the Senate following November’s midterm elections.
Tether interested in three-way
Undeterred by this Congressional scrutiny, Tether Investments—the company claims this is separate from the ‘other investments’ section of USDT’s reserves—has proposed a three-way merger of its BTC block reward mining unit Elektron Energy with Twenty One Capital (NASDAQ: XXI)—a struggling digital asset treasury (DAT) firm in which Tether holds a majority stake—and a third party, crypto processor Strike.
For the record, Tether is becoming increasingly fond of these incestuous deals, as its Elektron mining unit was acquired last year from Northern Data (ETR: NB2.MU). Northern Data was also a Tether-owned entity, at least until Tether sold Northern Data to video-sharing platform Rumble (NASDAQ: RUM), in which Tether made a $775 million strategic investment ($610 million of which was a loan so Rumble could buy Northern Data).
Tether provided over $2 billion to fund XXI’s launch one year ago, topping that up with an additional ~$700 million last August. The support of Tether, Tether’s sister company Bitfinex, and other investors, such as Cantor Equity Partners, helped grow XXI’s BTC stack to 43,514 tokens, currently good enough for second place on the BTC DAT list, behind only Michael Saylor’s Strategy (NASDAQ: MSTR).
But none of this seemed to help XXI’s share price, which peaked at ~$50 shortly after its launch and currently trades below $9 (a sight better than the $6 it traded at in April before the big merger news). Hence, the need to combine all these firms into one big firm that will (however briefly) spark investor enthusiasm.
Tether claims Elektron has “built a profitable, cash-flow-positive platform,” while Strike is “profitable, trusted, and one of the most well-known brands in Bitcoin.” XXI wasn’t offered the same ‘profitable’ fluffery, having lost $217.3 million last year, but Tether believes the XXI-Elektron-Strike combo could “leverage a strong balance sheet, a large-scale profitable operating business, and a financial services division built to spearhead Bitcoin adoption.”
Neither the terms nor the timing of the proposed merger have been announced, but given that Tether Investments effectively controls two of the three firms, all that’s required is Strike founder Jack Mallers’ approval, and he’s already stated that he’s on board. Mallers also serves as XXI’s CEO, so it was hard to imagine him declining this ‘proposal.’
Mallers told BitcoinTreasuries.net that the plan is to basically tokenize every aspect of the combined entity’s operations, presumably so they can be sold, repackaged, and sold again. The combined entity will use the cash to buy more BTC—because if DATs like XXI and MSTR stop buying the token, no one else will—and then loan out its new BTC, allowing XXI+ to become “the ideal Bitcoin company.” (Look away, Satoshi Nakamoto.)
LatAm stablecoin market not always what it seems
Tether recently led a $14 million investment round in Argentine crypto platform Belo in a bid to bolster its Latin American presence. Belo CEO Manuel Beaudroit told Bloomberg that Tether is “looking for distribution and they see Belo as a player that can help strongly push the use of USDT, both in the client-facing level and in the infrastructure level.”
The funds will help Belo combine payments, cross-border transfers, savings, and more into a single app. Belo, which currently boasts three million users of its digital wallet, recently expanded into Brazil, with several other LatAm markets slated for expansion later this year.
Claudia Wang, chief marketing officer at the Bybit exchange, posted a lengthy X article over the weekend that sought to challenge the prevailing wisdom regarding stablecoin remittances flowing south of the U.S. border.
Wang noted that while the U.S.-to-Mexico corridor led the LatAm stablecoin remittance market last year with nearly $62 billion in total volume, the figure was down 4.5% from 2024, the first time in 11 years this corridor has reported an annual decline.
While much smaller in volume, U.S. stablecoin flows to Guatemala rose 15% to $17.2 billion last year, and it wasn’t the only Central American market showing double-digit growth. The trend was also on display in Colombia ($13.4 billion, +13%), the Dominican Republic ($10 billion, +10%), El Salvador ($7.9 billion, +18%), and Honduras ($6.6 billion, +19%).
Wang credited this surge to U.S. immigration policy, as foreign workers fear deportation at any minute and are thus increasing the size of their remittances to ensure as much money gets home while the opportunities still there.
On the whole, U.S.-to-Central America stablecoin flows are up 20% to $55 billion, while South America rose 11% to $36 billion, and the Caribbean reported 9% growth to $21 billion.
But Wang suggested fintechs should focus on the “unfought territory” that is stablecoin traffic between these Central/South American markets. As Wang put it, “if you want a defensible corridor in 2026, this is where to look — especially as the U.S. 1% remittance tax (passed summer 2025, affecting roughly half of senders) starts pushing volume toward digital and non-U.S. channels.”
Wang also clarifies that in these markets, “the stablecoin balance is the product—not the transaction … Users don’t want to ‘use’ stablecoins for a transaction and convert back to local currency. They want to hold dollars. The transaction is the side effect … The remaining question is where they hold the balance: an exchange, a wallet, a neobank, or a card-linked account. The product that captures the daily balance wins the user.”
Brazil could throw wobblers at ‘foreign’ stablecoin issuers
Last week saw Brazil’s central bank (BCB) release a resolution (BCB No. 561) barring digital assets—including stablecoins—from international payments and transfers. The change takes effect on October 1.
After that date, payment or receipt between a licensed electronic foreign exchange (eFX) provider and its foreign counterpart must be done exclusively “through foreign exchange transactions or movements in a non-resident’s real-denominated account held in Brazil, the use of virtual assets being prohibited.”
Licensed virtual asset service providers (VASPs) can continue to transact in stablecoins for international transfers under BCB No. 521, which, as of May 4, made it mandatory for VASPs to provide foreign exchange and foreign capital transaction data to the BCB.
However, Cointelegraph Brazil reported that BCB is also mulling a ban on stablecoin transactions that use tokens outside the BCB’s supervision. This proposal, made in a technical note to the country’s proposed ban on ‘uncollateralized’ (algorithmic) stablecoins (Bill No. 4308/2024), would lump in USDT and the USDC issued by Tether’s closest stablecoin rival Circle (NASDAQ: CRCL).
The BCB claims these foreign-issued non-real stablecoins “present the greatest systemic challenges, combining jurisdictional risk, impact on capital flows, and potential fragmentation of the payment system.” However, the legislature will have the final say on this matter.
In February, the BCB’s director of monetary policy, Gabriel Galipolo, said token usage in the country was soaring, and 90% of Brazilians’ digital asset flow involved stablecoins. Galipolo said most of that stablecoin volume is “to buy things and to shop things from abroad,” although he added that it “maintains some kind of opaque vision for taxation or for money laundering.”
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