The issuer of stablecoin Tether is reportedly in discussions with one of the Big Four accounting firms to conduct an audit of its asset reserves in order to confirm that its USDT stablecoin is backed at a 1:1 ratio.
Tether’s CEO, Paolo Ardoino, mentioned that the audit process could be simplified under the pro-crypto administration of President Donald Trump. This comes amid increasing industry worries about a liquidity crisis for Tether reminiscent of the FTX situation, largely due to its absence of third-party audits.
Tether plans to provide its first comprehensive audit following scrutiny
“When the President of the United States designates this as a top priority, Big Four firms have to pay attention, and we are very optimistic about that,” Ardoino remarked on March 21.
“This is our utmost priority,” Ardoino added. Currently, Tether is required to publish quarterly reports, but it has not undergone a full independent annual audit, which offers greater assurance to both investors and regulators.
However, Ardoino did not specify which of the Big Four firms—PwC, EY, Deloitte, or KPMG—he intends to collaborate with.
Tether reported a profit of $13.7 billion in 2024.
Tether’s USDT aims to maintain its stable value by asserting that it is pegged to the US dollar at a 1:1 ratio, indicating that each USDT token is supported by reserves that match its circulating supply.
These reserves consist of traditional currencies, cash equivalents, and other assets.
Earlier this month, Tether appointed Simon McWilliams as CFO in advance of the impending full financial audit.
Industry apprehension regarding Tether’s audit situation
In September 2024, Justin Bons, founder of Cyber Capital, was among those in the industry expressing concern over Tether’s transparency issues.
“[Tether is] one of the largest existential threats to the crypto space. We have to trust that they hold $118 billion in collateral without any proof! This follows the CFTC’s fine against Tether for misrepresenting their reserves in 2021,” Bons stated.
Related: Tether freezes $27 million in USDT on a sanctioned Russian exchange, Garantex.
At about the same time, Consumers’ Research, a consumer advocacy group, released a report criticizing Tether for its lack of clarity regarding its US dollar reserves.
Just three years earlier, in 2021, the U.S. Commodities and Futures Trading Commission (CFTC) imposed a $41 million civil monetary penalty on Tether for falsely claiming that USDT was fully backed by reserves.
More recently, Tether expressed disappointment over new European regulations that have compelled exchanges like Crypto.com to delist USDT along with nine other tokens to adhere to MiCA.
“We find it disappointing to witness these hasty actions prompted by statements that offer little in the way of clarifying the rationale for such moves,” a Tether spokesperson stated.
The publication attempted to reach out to Tether but did not receive a response before going to press.
Magazine: A beginner’s guide to native rollups: Layer 2s as secure as Ethereum itself.