Tether Seeks Big Four Audit
Stablecoin issuer Tether is reportedly negotiating with a Big Four accounting firm to conduct a comprehensive audit of its asset reserves. This move aims to verify the 1:1 backing of its USDT stablecoin, a claim that has faced intense scrutiny.
Tether's Path to a Full Audit
Tether CEO Paolo Ardoino indicated that the audit process is a top priority and suggested that the support of a pro-crypto US administration facilitated the engagement with a Big Four firm. While Tether currently produces quarterly reports, a full independent annual audit would provide significantly greater assurance to investors and regulators.
Ardoino did not disclose which of the Big Four firms—PwC, EY, Deloitte, or KPMG—Tether is working with. He previously stated that a full audit would be easier under a pro-crypto US president, highlighting the political landscape's influence on this significant development.
Tether's USDT maintains its peg to the US dollar by claiming to hold equivalent reserves, including traditional currency, cash equivalents, and other assets. This 1:1 backing is crucial for maintaining trust and stability in the cryptocurrency market.
Tether recorded a profit of $13.7 billion in 2024. Source: Paolo Ardoino
The decision to pursue a full audit follows the recent appointment of Simon McWilliams as Tether's chief financial officer, further suggesting a commitment to increased transparency and financial accountability.
Addressing Industry Concerns
Concerns regarding Tether's transparency have been voiced repeatedly by industry figures. In September 2024, Justin Bons of Cyber Capital highlighted Tether as a significant risk due to the lack of verifiable proof for its $118 billion in claimed collateral. This concern was amplified by the CFTC's 2021 fine for misrepresenting reserve holdings.
Consumers' Research, a consumer protection group, also published a report criticizing Tether's lack of transparency. The combination of these concerns and the $41 million CFTC fine underscores the significance of Tether's commitment to a full audit.
Tether's recent disappointment regarding new European regulations that led to USDT delistings on platforms like Crypto.com highlights the regulatory challenges facing stablecoins. The company expressed frustration with the perceived lack of clarity behind these regulatory decisions.
Codeum’s services, including smart contract audits and tokenomics consultations, are vital for projects aiming to maintain transparency and build trust within the blockchain ecosystem. Codeum helps projects like Tether improve security and regulatory compliance.