Written by: Frank, PANews
Tether, the issuer of the world's largest stablecoin USDT, is accumulating physical gold at an unprecedented pace.
Tether's report for the third quarter of 2025 shows that its gold reserves have soared to $12.9 billion, up from about $5.3 billion at the end of 2024. In just nine months, its gold holdings have net increased by over $7.6 billion. Market analysts point out that Tether has been adding more than one ton of gold each week over the past year. This accumulation rate even surpasses that of most sovereign central banks.
Moreover, Tether has begun acquiring controlling stakes in gold mines and poaching top global precious metals traders. Behind these various moves, it seems that Tether is building a "borderless central bank" with U.S. Treasuries as the profit engine and gold and Bitcoin as the value "hardcore." However, is such a vision truly feasible behind this seemingly perfect business empire?
$12.9 Billion in Reserves Contributes $4 Billion in Unrealized Gains
Tether's financial performance in 2025 is nothing short of astonishing. In the first nine months, its net profit exceeded $10 billion. This high yield has directly pushed Tether's valuation to $500 billion, comparable to OPENAI.
The source of this $10 billion profit perfectly reveals Tether's "alchemy." It consists mainly of two parts:
Operating profit: Derived from the stable interest income generated by its holdings of approximately $135 billion in U.S. Treasuries.
Book "unrealized gains": From its holdings of gold and Bitcoin reserves, which generated substantial unrealized gains during the bull market of 2025.
Although Tether has not disclosed the composition of its profits, we can still make some rough analyses.
The yield from U.S. Treasuries is estimated to be around $4 billion (at a 4% annual yield).
The contribution from gold is particularly notable. At the beginning of 2025, the gold price was about $2,624 per ounce, and by September 30, it had surged to $3,859, an increase of 47%. Based on Tether's $5.3 billion gold inventory at the end of 2024, this portion of "old gold" alone generated about $2.5 billion in unrealized gains. With this estimate, along with the newly purchased gold in 2025, as much as $3 to $4 billion of Tether's $10 billion profit comes from the appreciation of gold. The unrealized gains from Bitcoin are around $2 billion.
This has directly led to gold becoming a crucial part of Tether's income composition. What Tether is doing is not just relying on gold for massive profits; it is emulating a sovereign nation's strategic reserve logic, attempting to control the entire gold industry chain from mining to trading.
In June 2025, Tether Investments announced the acquisition of a strategic stake of up to 37.8% in the Canadian-listed gold mining royalty company Elemental Altus Royalties Corp., retaining the right to increase its stake to 51.8%, which means Tether could take control of the company. Through this royalty model, Tether can obtain a stable share of gold production over the coming decades without bearing the operational risks of mining, ensuring the security of its gold reserves from the source.
In November, Tether also "poached" two top global precious metals traders from HSBC. One of the poached traders, Vincent Domien, is not only the global head of metals trading at HSBC but also a current board member of the London Bullion Market Association (LBMA).
Additionally, there is Tether Gold (XAUT), an independent gold tokenized product in the crypto market, with a market capitalization exceeding $2.1 billion. Tether, in collaboration with Singapore financial services company Antalpha, plans to raise at least $200 million for a project called "Digital Asset Treasury" (DAT). The goal of this fund is to accumulate XAUT tokens and establish an "institutional-grade gold-backed lending solution."
"U.S. Treasuries-Gold" Closed Loop, Forging a "Borderless Central Bank"
Under a series of arrangements, Tether has constructed a seemingly perfect business model:
Absorbing dollars: Tether issues USDT, absorbing nearly $180 billion in funds from the global market.
Investing in U.S. Treasuries: It invests the vast majority in highly liquid and secure U.S. Treasuries.
Earning interest: During the Federal Reserve's high-interest rate cycle, Tether can easily earn billions of dollars in "risk-free" interest each year.
Purchasing gold: It uses part of its profits to accumulate gold and lay out the gold industry to hedge against the depreciation of U.S. Treasuries or the risk of interest rate cuts.
Excess reserves: By accumulating gold and Bitcoin, it achieves an excess reserve ratio, further consolidating the security and brand value of the stablecoin market, ultimately enabling more stablecoin issuance.
Behind this series of combined operations, Tether is no longer just a simple cryptocurrency company. It resembles a "shadow bank" and has even evolved into a non-sovereign central bank. Its holdings of U.S. Treasuries and gold reserves exceed those of many countries.
In this cycle, Tether has become one of the most efficient money-making companies globally. It has begun to further expand into various fields such as AI, education, electricity, and agriculture, continuing to broaden its business landscape. Most importantly, against the backdrop of rapid growth in the stablecoin industry, Tether, as a giant with "minting rights," will form a strong influence in more industries and regions worldwide, an influence that may reach heights never before attained by any commercial company.
Three Major Cracks in the Perfect Empire
However, behind perfection seems to always hide the beginning of another cycle. Tether's "perfect logic" is facing triple threats from regulation, the market, and competition. Any one of these threats could become a stumbling block to its vision of a "borderless central bank."
Threat One: The Wall of Regulation
Gold reserves have brought Tether massive profits but have also become its biggest stumbling block on the path to compliance. In July 2025, the U.S. signed the "GENIUS Act," which explicitly requires that stablecoin issuers operating in the U.S. must have their reserves 100% backed by "high-quality liquid assets," namely U.S. dollar cash or short-term U.S. Treasuries.
This is Tether's "Achilles' heel." According to Tether's Q3 report, its total reserves amount to $181.2 billion, while the issued USDT stands at $174.4 billion. Among these, $12.9 billion in gold and $9.9 billion in Bitcoin, along with other investments and loans, are all considered "non-compliant assets" under the definition of the "GENIUS Act."
J.P. Morgan's analysis report in 2025 bluntly pointed out that if Tether wants to operate in compliance in the U.S., it may be forced to sell its "non-compliant assets," including Bitcoin and precious metals.
This scenario has already played out in Europe. Due to Tether's reserves not meeting the EU's MiCA regulations, from the end of 2024 to March 2025, almost all mainstream exchanges, including Coinbase and Crypto.com, have delisted USDT in the European Economic Area (EEA).
As the details of the "GENIUS Act" are gradually implemented over the next 18 months, all compliant U.S. exchanges (such as Coinbase and Kraken) will be forced to make the same choice. Although Tether claims not to serve U.S. customers, once it is collectively blocked by U.S. exchanges, its global liquidity will suffer a severe blow, akin to a "forced exit" from the world's largest compliant market.
Tether's response also confirms the reality of this threat. In September 2025, Tether announced the establishment of Tether America and appointed former White House advisor Bo Hines as CEO (see related article: "29-Year-Old Crypto Newcomer Bo Hines: From White House Crypto 'Liaison' to Rapidly Taking the Helm of Tether's U.S. Stablecoin"), planning to launch a new stablecoin called USAT in December. This USAT will be 100% compliant (holding only Treasuries) and specifically for the U.S. market. This seems to be setting up a "firewall," sacrificing the future of USDT in the U.S. to protect its global strategy for gold and Bitcoin reserves. However, USAT appears more like a strategic layout for Tether rather than a transformation goal.
Threat Two: The Bear Market Devours
As mentioned earlier, Tether's profit composition mainly comes from two major segments. One is Treasury yields, and the other, a larger portion, is the rising gains from gold and Bitcoin. The outstanding performance of Tether in 2025 is also attributed to the record highs in gold and Bitcoin prices.
However, this profit composition clearly carries significant risks. If the market direction changes in 2026, Tether's potential profit growth may slow down or even turn into losses.
Firstly, several mainstream financial institutions predict that the Federal Reserve will enter a rate-cutting cycle in 2026. According to estimates, if the Fed cuts rates by 25 basis points, Tether's annual income will decrease by $325 million.
On the other hand, the gold and Bitcoin markets experienced a frenzied bull market in 2025. Although the market remains optimistic under the expectation of rate cuts in 2026, the market always creates surprises. If gold and Bitcoin enter a bear market cycle (of course, they may not enter a bear market simultaneously, which is also the core purpose of Tether's hedging strategy), Tether's earnings from gold and Bitcoin will also shrink significantly, and profits may be wiped out in the new cycle.
Additionally, when the crypto market enters a bear market, the issuance of stablecoins will also slow down or even decline. This will directly impact Tether's earnings.
Threat Three: Rising Competitors
The tightening of regulations is reshaping the market landscape for stablecoins. The U.S. "GENIUS Act" and the EU's MiCA regulations are clearing obstacles for those compliant stablecoins that have been "purebred" from the start.
The biggest beneficiaries are Circle's USDC. As a leader in compliance, USDC has been welcomed by regulators. Circle's Q3 2025 financial report shows that its USDC circulation reached $73.7 billion at the end of the quarter, achieving a remarkable 108% year-on-year growth.
In contrast, while Tether remains dominant, its growth has shown signs of fatigue. Data from September 2025 indicates that although the scale of USDT has grown to $172 billion, its growth rate is significantly slower compared to USDC. According to PANews' previous "2025 Global Stablecoin Industry Development Report," USDC is expected to surpass USDT around 2030 based on the current stablecoin issuance growth rate. In summary, the "gold strategy" is both Tether's moat and a potential concern that could erode its business walls. However, objectively speaking, this business logic, originally built for risk hedging, remains the most stunning design currently constructed in the crypto world. After all, according to institutions including J.P. Morgan and Goldman Sachs, the Federal Reserve's rate-cutting cycle in 2026 is unlikely to trigger a bear market; instead, it may serve as "fuel" to push gold and Bitcoin prices to new highs. If the script develops this way, Tether's "gold strategy" will help it reach new heights.
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