Bitcoin News Update: Tether’s Bold Moves in Gold and Bitcoin Spark Debate Over Stability and Regulatory Oversight

Tether Faces Heightened Scrutiny Over Risky Asset Holdings

Tether has come under increased examination as analysts raise alarms about the stablecoin issuer’s growing investments in volatile assets such as Bitcoin and gold. Experts caution that this shift could threaten the stability of Tether’s main token, USDT.

These concerns intensified after S&P Global Ratings downgraded USDT’s peg stability score to a “weak five” in November 2025. The downgrade was attributed to Tether’s increased allocation to higher-risk reserves, including a 5.6% stake in Bitcoin—surpassing its 3.9% overcollateralization margin. S&P also pointed out insufficient transparency in Tether’s reserve management and called for the company to limit its exposure to unpredictable assets and provide more detailed disclosures.

Significant Gold Accumulation and Market Impact

In 2025, Tether dramatically altered its reserve composition, acquiring 116 tonnes of physical gold by September—an amount comparable to the reserves of central banks in countries like South Korea and Hungary. This aggressive buying spree represented 2% of global gold demand in the third quarter and has been linked to a 50% increase in gold prices so far this year. Analysts from Jefferies observed that Tether’s purchases have tightened short-term gold supply and influenced investor sentiment. The firm expects Tether’s gold holdings to reach 100 tonnes by the end of the year. Meanwhile, Tether’s gold-backed token, XAU₮, has seen its market cap climb to $2.1 billion, with issuance doubling since August.

Broader Diversification and Strategic Shifts

Tether’s diversification strategy extends beyond gold, as the company has also increased its Bitcoin reserves. However, S&P warns that Bitcoin’s price swings could expose USDT to undercollateralization risks if the market turns bearish. While U.S. Treasuries and cash equivalents still make up the majority of Tether’s reserves, the company’s embrace of alternative assets signals a significant strategic shift. CEO Paolo Ardoino recently defended Tether’s approach, describing criticism as pushback from what he called the “traditional finance propaganda machine.”

Regulatory Hurdles and Adaptation

The regulatory landscape is becoming more complex for Tether. The U.S. GENIUS Act, enacted in July 2025, requires stablecoins to be fully backed by “high-quality liquid assets,” explicitly excluding gold. In response, Tether announced the launch of a U.S.-specific stablecoin, USAT, which will be entirely backed by Treasuries, while continuing to hold gold and Bitcoin reserves for its global operations. This dual approach is designed to address regulatory requirements while maintaining operational flexibility. Additionally, Tether recently closed its mining operations in Uruguay due to high energy costs, illustrating the difficulties of running energy-intensive businesses in expensive markets.

Debate Over Transparency and Future Resilience

The market remains divided on Tether’s evolving strategy. Supporters argue that the company’s diversified reserves and profitability have positioned it as a quasi-central bank in the crypto world. However, critics highlight ongoing concerns about the lack of independent audits and transparency, warning that these issues could undermine trust. Tether’s omnichain stablecoin, USDT0, has processed $50 billion in transfers across 15 blockchains, demonstrating its commitment to expanding liquidity. Nevertheless, increased regulatory scrutiny and potential shifts in the macroeconomic environment—such as possible Federal Reserve rate cuts—may challenge Tether’s resilience in the coming year.