Tether finally obtained a Big Four audit, but USDT's transparency issues are far from over
- Key Takeaway: Tether received its first unqualified audit opinion from KPMG US on its 2025 annual financial statements, confirming that reserve assets exceeded liabilities by $6.814 billion, marking a substantial breakthrough in its transparency efforts. However, questions remain regarding the audit report's lack of full public disclosure, the scope of the audit, and the shrinking reserve buffer.
- Key Elements:
- KPMG completed its first comprehensive audit of Tether International, issuing the highest-level unqualified opinion, covering all four financial statements and physically counting gold bars. As of the end of 2025, reserves exceeded liabilities by $6.814 billion.
- This audit differs from BDO's previous quarterly reserve attestations — the former examines fund flows, internal controls, and valuation systems, while the latter is merely a snapshot of assets at a specific point in time. This distinction explains why it took Tether a decade to complete this milestone.
- The full audit report has not been publicly released, and CoinDesk received no response to inquiries. Core details such as notes, key audit matters, and related-party disclosures cannot be independently verified. Additionally, the audit scope covers only the issuing entity, leaving the group's multi-layered structure unclear.
- The reserve buffer has rapidly shrunk since the audit date: BDO's attestation for Q2 2026 showed the buffer had fallen to $4.11 billion, a decrease of approximately 40% from $6.814 billion. Over 80% of reserves are held in U.S. Treasuries, while disclosure on risk assets such as secured loans remains limited.
- The audit lags the reporting date by 8 months, during which USDT circulation grew from $144 billion to $184 billion, raising questions about the timeliness of an annual audit. Furthermore, Tether has not committed to a future audit frequency or to retaining KPMG on an ongoing basis.
- The audit carries strategic significance under the GENIUS Act regulatory framework. Although the Act's audit requirements do not automatically apply to offshore issuers, Tether is leveraging this to signal proactive compliance to U.S. regulators, while also launching USAT as a Plan B. A transition period remains before full compliance is achieved.
Original author: Xiaobing
A decade of questions, answered in a single moment.
On August 13, Tether announced that KPMG US had completed its first independent audit of Tether International, S.A. de C.V.'s financial statements for the year ended December 31, 2025, issuing an unqualified opinion. This is the highest level of assurance an independent auditor can provide, meaning KPMG concluded that Tether's financial statements fairly present, in all material respects, the company's financial position, results of operations, and cash flows in accordance with US GAAP.
The audit covered the balance sheet, income statement, statement of changes in owners' equity, and statement of cash flows. Auditors physically counted and examined every single gold bar held by Tether, verifying the underlying evidence for transaction records, systems, valuations, counterparties, and asset ownership. The audit results showed that as of the end of 2025, Tether's reserve assets exceeded liabilities by $6.814 billion.
When CEO Paolo Ardoino announced the results on X, his tone was unusually buoyant. He called it the "largest initial financial audit in history" and directly fired back at critics who have questioned Tether for years.
The significance of this audit should not be underestimated, but it is also not the finish line. A careful examination of the audit's scope and boundaries reveals precisely the most subtle yet critical aspects of the USDT transparency issue.
An audit and an attestation are two completely different things
Let's first clarify a basic concept.
In recent years, Tether has published quarterly reserve attestation reports issued by BDO Italia. These reports verify whether Tether's reserve assets cover the issued token liabilities at a specific point in time. It's like taking a snapshot of a vault: is the money there, and is it sufficient?
What KPMG did this time is entirely different. A full financial statement audit doesn't just count how much money is in the vault; it examines the source of those funds, the flow paths, ownership records, valuation methodologies, and the integrity of the entire financial reporting system. Auditors need to sample transactions, evaluate internal controls, assess the appropriateness of accounting policies, and check whether related-party transactions are adequately disclosed.
This is also why it took Tether a decade to reach this point. In 2017, Friedman LLP was dismissed; in 2021, Tether hired MHA Cayman (later absorbed into the BDO network) for attestations; in 2024, it completed a SOC 2 Type 1 information security review; in March 2026, it announced the engagement of one of the Big Four for a full audit, with PwC involved in preparing internal systems for compliance. Every step along this path was laying the groundwork for the final audit.
The leap from attestation to audit represents substantial progress for Tether. But from the perspective of investors and regulators, several questions warrant further scrutiny.
Five questions that still need to be asked
Where is the audit report itself?
As of press time, Tether has announced the completion of the audit and KPMG's unqualified opinion, but has not provided the full text of the KPMG audit report to the public or media. CoinDesk asked Tether whether it would release the complete KPMG audit documents and has not yet received a response. The value of an audit report lies not only in the opinion page, but also in the notes, accounting policy descriptions, key audit matters, breakdown of reserve asset classifications, and related-party transaction disclosures contained within. Without releasing the full report and only announcing the conclusion, external analysts cannot independently verify the most critical details.
Where are the boundaries of the audited entity? The entity audited by KPMG is "Tether International, S.A. de C.V." Ardoino told The Block that this is the entity that issues USDT, and the audit covered all financial data. However, Tether's group structure is far more complex than a single entity. The parent company Tether Holdings Limited (registered in the BVI), Tether Operations Limited, Tether Investments Limited, Tether Gold-related entities, and others form a multi-layered holding structure. In previous BDO attestation reports, Tether Investments Limited's assets were explicitly excluded from the definition of "reserves." Whether KPMG's audit scope aligns with BDO's attestation coverage, and whether intra-group related-party transactions were adequately examined within the audit scope, are questions that can only be assessed by seeing the full report.
The $6.8 billion reserve buffer is shrinking rapidly. The KPMG audit confirmed that reserves exceeded liabilities by $6.814 billion at the end of 2025. By Q1 2026, BDO attestations showed this figure had risen to approximately $7.1-8.2 billion (figures vary across data sources). But by Q2 2026, BDO attestations showed the reserve buffer had dropped to $4.11 billion, a decline of roughly 40% from the KPMG audit date.
The credit and concentration risks of reserve assets have not disappeared with the audit. An unqualified opinion means the financial statements are fairly presented, not that the reserve assets are risk-free. As of Q1 2026, approximately 80-83% of Tether's reserves were in US Treasuries, 5-7% in overnight reverse repurchase agreements, 3-5% in money market funds, with additional holdings in gold (over 146 tonnes), bitcoin, and secured loans. The secured loans category has long been a focal point of external scrutiny. At the end of 2023, Tether pledged to eliminate this asset class, but as of mid-2024, $5.5 billion remained. Who the loans are extended to, what the collateral consists of, and how concentrated they are — these details have always been thinly disclosed in attestations. A complete audit report, if made public, should provide more detailed breakdowns in the notes.
Audit timing and continuity issues. This audit corresponds to financial data from eight months ago. During those eight months, USDT's circulating supply grew from approximately $144 billion to over $184 billion, an increase of roughly $40 billion. For a financial institution whose balance sheet is expanding at such a pace, the timeliness of an annual audit is inherently diminished. Will Tether commit to having KPMG continue auditing the fiscal year 2026? Will the audit frequency be increased to semi-annual or even quarterly? These are questions Tether has not yet directly addressed.
A key move on the regulatory chessboard
Understanding the strategic significance of this audit requires placing it within the broader regulatory landscape.
In July 2025, the US President signed the GENIUS Act, establishing a federal framework for stablecoin regulation. The Act requires compliant issuers to hold 1:1 cash or short-term Treasury reserves, publish monthly reserve attestations, and undergo annual audits. But the key point is that the GENIUS Act's audit requirements do not automatically apply to offshore issuers. Tether is headquartered in El Salvador and is not a US-registered entity.
The Act provides a pathway for offshore issuers: the US Treasury Department must make a "reciprocity determination," concluding that the issuer's home country regulatory framework is "comparable" to that of the US. As of mid-2026, this determination is still pending. Senator Jack Reed has even introduced a separate bill, the Foreign Stablecoin Transparency Act, seeking to close the regulatory gap in the GENIUS Act regarding offshore issuers.
Against this backdrop, Tether securing KPMG's unqualified opinion is undeniably a powerful card. The signal it sends to US regulators is that even without a legal mandate, Tether is voluntarily raising its transparency standards to align with the most rigorous audit expectations. Meanwhile, in January 2026, Tether launched USAT, a token specifically designed for the US market, through Anchorage Digital Bank, serving as a compliant Plan B.
But there remains a gap between completing an audit and achieving regulatory compliance. The GENIUS Act provides digital asset service providers a three-year transition period (until July 2028), after which non-compliant stablecoins would be barred from listing on US trading platforms. The clock is ticking, and Tether obtaining an audit is just one of the necessary conditions for clearing the hurdle.
Filtering out all the noise, this audit does prove several important things.
At least as of the end of 2025, Tether was capable of presenting its financial statements to the world's most rigorous audit standards and receiving the highest level of approval. This is no easy feat. KPMG would not risk its reputation by issuing a false opinion for a $180 billion financial entity. After all, Arthur Andersen collapsed over the Enron audit scandal — the Big Four value their reputations above almost anything else.
The audit also confirmed that Tether holds a substantial excess of assets over liabilities, that reserve composition is dominated by US Treasuries, and that its gold holdings were physically counted. For a company long questioned over whether its reserves even existed, this is the most powerful answer to date.
Ardoino said this is not the end, but "the beginning of the next journey." Indeed, the true test only begins the moment the complete audit report is made public.
