Written by: Xiao Bing

After a decade of questioning, it has finally come to fruition.

On August 13, Tether announced that KPMG USA had completed the first independent audit of Tether International, S.A. de C.V. for the financial statements as of December 31, 2025, issuing an unqualified opinion. This is the highest rating that independent auditors can give, meaning that KPMG believes Tether's financial statements fairly present the company's financial position, operational results, and cash flows in all material respects in accordance with U.S. Generally Accepted Accounting Principles (US GAAP).

The audit covered the balance sheet, income statement, statement of changes in equity, and cash flow statement. The auditors physically counted and inspected each gold bar held by Tether, verified transaction records, systems, valuations, counterparties, and the underlying evidence of asset ownership. The audit results show that as of the end of 2025, Tether's reserve assets exceeded liabilities by $6.814 billion.

When CEO Paolo Ardoino announced this result on X, his tone was unusually spirited. He referred to it as "the largest initial financial audit in history" and directly rebuffed critics who have questioned Tether for years.

The significance of this audit should not be underestimated, but it is not the end of the journey. A careful breakdown of the content and boundaries of this audit reveals the most subtle and critical aspects of the transparency issues surrounding USDT.

Auditing and Attestation are Two Completely Different Things

First, clarify a basic concept.

Over the past few years, Tether has released quarterly reserve attestation reports prepared by BDO Italy. These reports verify whether Tether's reserve assets cover the issued token liabilities as of a specific point in time. It is akin to taking a snapshot of a safe: is the money there, and is it sufficient?

KPMG's work this time is entirely different. A complete financial statement audit not only counts how much money is in the safe but also examines the sources of the money, the flow paths, ownership records, valuation methods, and the integrity of the entire financial reporting system. Auditors need to sample verify transactions, assess internal controls, determine 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 terminated, in 2021, MHA Cayman (later merged into the BDO system) was rehired for attestation, in 2024, a SOC 2 Type 1 information security review was completed, and in March 2026, it was announced that one of the Big Four would be hired for a comprehensive audit, with PwC participating in the compliance preparation of internal systems. Each step on this path has laid the groundwork for the eventual audit.

The leap from attestation to audit represents a substantial advancement for Tether. However, from the perspective of investors and regulators, there are several questions that still need to be addressed.

Five Questions Still to be Asked

Where is the audit report itself?

As of the time of publication, Tether has announced the completion of the audit and KPMG's unqualified opinion conclusion, but has not provided the full KPMG audit report to the public or media. CoinDesk has inquired whether Tether will release the complete KPMG audit documents but has not yet received a response. The value of an audit report lies not only in the conclusion page but also in the notes, explanations of accounting policies, key audit matters, details of reserve asset classifications, and disclosures of related party transactions. Publicizing only the conclusion without the full report prevents external analysts from independently verifying the most critical details.

What are the boundaries of the auditing entity? The entity audited by KPMG is "Tether International, S.A. de C.V." Ardoino told The Block that this is the issuing entity for USDT, and the audit covers all financial data. However, Tether’s group structure is far more complex than a single entity. The parent company Tether Holdings Limited (registered in BVI), Tether Operations Limited, Tether Investments Limited, Tether Gold-related entities, etc., form a multi-layered holding structure. In previous BDO attestation reports, the assets of Tether Investments Limited were explicitly excluded from the definition of "reserves." Whether KPMG's audit boundaries align with BDO's attestation coverage and whether inter-group related party transactions were adequately tested within the audit scope requires seeing the complete report to assess.

The $6.8 billion reserve buffer is rapidly shrinking. KPMG's audit confirmed that at the end of 2025, reserves exceeded liabilities by $6.814 billion. By the first quarter of 2026, BDO's attestation reported this number rising to approximately $7.1-8.2 billion (data varies by source). However, by the second quarter of 2026, BDO attestation showed that the reserve buffer had dropped to $4.11 billion, about a 40% decrease from the time of KPMG's audit.

The credit and concentration risk of reserve assets have not disappeared due to the audit. An unqualified opinion means the financial statements are fairly presented; it does not mean that the reserve assets are free of risk. As of the first quarter of 2026, about 80-83% of Tether's reserves were U.S. Treasury securities, 5-7% in overnight reverse repos, 3-5% in money market funds, along with gold (over 146 tons), Bitcoin, and secured loans. The secured loans category has long been a focus of external scrutiny. By the end of 2023, Tether had pledged to eliminate this part of the assets, but as of mid-2024, $5.5 billion still remained. Questions remain about to whom the loans were made, what the collateral was, and the level of concentration, with disclosures in the attestation always being limited. A comprehensive audit report, if made public, should provide more detailed classifications in the notes.

The audit's timing and continuity issues. This audit corresponds to financial data from eight months ago. During these eight months, the circulation of USDT grew from approximately $144 billion to over $184 billion, an increase of about $40 billion. For a financial institution with such rapidly expanding balance sheets, the timeliness of annual audits is inherently diminished. Will Tether commit to continuing to have KPMG conduct audits for 2026? Will the audit frequency increase to semi-annually or even quarterly? These questions have not yet been addressed directly by Tether.

A Key Move in the Regulatory Chessboard

To understand the strategic significance of this audit, it needs to be placed within a larger regulatory context.

In July 2025, the U.S. President signed the GENIUS Act, establishing a federal framework for stablecoin regulation. The bill requires compliant issuers to hold a 1:1 cash or short-term Treasury reserve, publish reserve attestations monthly, and undergo annual audits. However, the key point is that the audit requirements of the GENIUS Act do not automatically apply to offshore issuers. Tether is headquartered in El Salvador and is not a U.S. registered entity.

The bill sets a path for offshore issuers: the U.S. Treasury needs to make a "reciprocity determination," recognizing that the regulatory framework of the issuer's home country is "comparable" to that of the U.S. As of mid-2026, this determination is still under approval. Senator Jack Reed has even proposed the Foreign Stablecoin Transparency Act to close the regulatory gap created by the GENIUS Act for offshore issuers.

In this context, Tether's receipt of KPMG's unqualified opinion is undoubtedly a strong card. It sends a message to U.S. regulators that even without legal compulsion, Tether is proactively raising transparency standards to align with the strictest audits. At the same time, Tether launched a USAT token specifically for the U.S. market through Anchorage Digital Bank in January 2026 as a compliant Plan B.

However, there remains a gap between the completion of the audit and regulatory compliance. The GENIUS Act provides digital asset service providers a three-year transition period (until July 2028), after which non-compliant stablecoins will be prohibited from being listed on U.S. trading platforms. The clock is ticking; Tether's completion of the audit is only one of the necessary conditions for passing the hurdle.

Filtering out all the noise, this audit indeed proves several important things.

At least as of the end of 2025, Tether is capable of demonstrating its financial statements to the world's strictest audit standards and receiving the highest rating. This is no easy feat. KPMG would not risk its reputation by issuing a false opinion to an $180 billion financial entity. After all, Arthur Andersen collapsed due to the Enron audit scandal, and the Big Four cherish their reputations more than anyone else.

The audit also confirms that Tether has a substantial buffer exceeding its liabilities, with a reserve structure dominated by U.S. Treasury securities, and physical counts of gold holdings were conducted. For a company that has long faced questions about whether its reserves actually exist, this is the strongest response to date.

Ardoino stated that this is not the end; it is "the beginning of the next journey." Indeed, the true test begins the moment the complete audit report is made public.