Tether’s $1.5 billion Q2 profit and the reserve buffer problem

Tether earned $1.5 billion in three months while its safety cushion fell by half, raising questions about whether the world’s largest stablecoin can sustain its reserve strategy through a rate cycle. Summary Tether reported $1.5 billion in net operating profit for the second quarter of 2026, driven primarily by returns from US Treasury holdings and repurchase agreement operations. The company’s excess reserves fell from a record $8.23 billion at the end of Q1 to $4.11 billion at the end of Q2, a decline of approximately 50% in three months. USDT supply reached $184.6 billion, representing more than 60% of the global stablecoin market, while net issuance grew by only $446 million during the quarter. Tether increased its gold holdings by 14 tons to 146.2 metric tons and its bitcoin holdings to 98,933 BTC, but both positions lost value as gold fell 15% and bitcoin declined from $68,200 to $58,600 during the period. The KPMG audit that began in March 2026 continues without a completion date, and the GENIUS Act’s 2028 compliance deadline creates a regulatory clock that Tether has not yet publicly addressed. The numbers look strong. Tether generated $1.5 billion in net operating profit d...