Tether Audit Reveals Sharp Decline in Excess Reserves After Initial Milestone

Tether, the largest stablecoin issuer, has completed its first full financial statement audit by KPMG US. The audit confirms that Tether's reserves exceeded liabilities by $6.814 billion as of December 31, 2025. However, a follow-up disclosure showed that this cushion had already been cut roughly in half just three weeks later.

The KPMG audit was a significant milestone for Tether, providing an unqualified opinion on the company's 2025 financial statements. This is distinct from the quarterly reserve reports Tether has published through BDO, which are attestations rather than full audits. An attestation checks a narrower set of management assertions against a point-in-time snapshot, whereas a full audit examines the entire financial statement set and the controls behind it.

The real story here is not the $6.814 billion excess reserves at the end of 2025, but rather the sharp decline in this cushion just three weeks later to $4.11 billion. This drop was largely due to mark-to-market losses on Tether's volatile reserve mix, with unrealized declines on gold holdings accounting for roughly $2.8 billion and Bitcoin holdings losing about $0.9 billion in value.

The GENIUS Act, a federal stablecoin framework signed into law in July 2025, requires issuers to publish monthly reports of their reserves and total tokens outstanding. Issuers with over $50 billion in circulating stablecoins must also undergo annual GAAP-compliant financial statements audited to PCAOB standards.