Tether issues USD₮ (USDT), one of the world’s most widely used dollar-linked stablecoins. Calling it “safe,” however, requires a careful definition. Tether is not a bank, USDT is not a bank deposit, and a token trading near one dollar is not guaranteed to remain there. The useful question is whether Tether appears able to meet redemptions, and what could still go wrong.
USDT is designed to track the US dollar, but it is a privately issued crypto token. Holding it creates issuer, market, custody, blockchain and regulatory risks that do not apply in the same way to insured bank deposits
How Tether Supports USDT
Tether states that its fiat-denominated tokens are backed by reserve assets. Its report for 30 June 2026 listed about $187.75 billion of assets against $183.64 billion of liabilities, leaving a $4.11 billion buffer. Around $184.6 billion of tokens had been issued. Tether also reported $1.5 billion in second-quarter net operating profit, mainly from US Treasury bills and repurchase agreements.
| Reserve category | Approx. value | Share | Main consideration |
| US Treasury bills | $114.96bn | 61.2% | Liquid, short-dated government debt |
| Treasury-backed reverse repos | $25.62bn | 13.6% | Liquidity plus counterparty exposure |
| Precious metals | $18.84bn | 10.0% | Diversification and price volatility |
| Secured loans | $13.45bn | 7.2% | Credit and collateral risk |
| Bitcoin, equities and other investments | $14.81bn | 7.9% | Higher market and valuation risk |
| Cash and minor categories | $0.07bn | <0.1% | Small direct cash position |
The mix is far more Treasury-heavy than it was several years ago. Short-term government securities can generate interest while remaining easier to sell than longer-term or lower-quality assets. Profitability can add capital and absorb losses, but profit is not a legal guarantee to token holders.
Attestations Are Useful—but Not a Full Audit
Tether publishes quarterly reserve reports with independent assurance from BDO. For 30 June 2026, BDO conducted a “reasonable assurance” engagement under ISAE 3000 and concluded that the report was fairly presented in all material respects under Tether’s stated criteria. Procedures included bank and custodian confirmations, valuations, blockchain reconciliations and samples of secured loans.
The limits matter. The assurance covered one point in time, not every day of the quarter, and a reserve report rather than complete conventional financial statements. BDO noted that valuations assumed normal market conditions and could take longer to realise during extraordinary illiquidity. Tether announced in March 2026 that it had engaged a Big Four firm for a full audit; its Q2 release said the process was continuing.
What Past Controversies Matter?
Tether’s history justifies scrutiny. In 2021, the US Commodity Futures Trading Commission ordered it to pay $41 million over misleading claims that USDT had been fully backed by US dollars. The CFTC found that, during its examined 2016-2018 period, sufficient fiat reserves existed on only 27.6% of sampled days; reserves also included non-fiat assets and receivables.
Also in 2021, Tether and Bitfinex agreed to pay $18.5 million and stop serving New York customers after the New York Attorney General found that they had overstated reserves and concealed losses involving roughly $850 million. These historical cases explain demands for a full audit and more granular disclosure.
The Main Risks for USDT Holders
Depegging: USDT can trade below one dollar when markets doubt reserve quality, redemption capacity or exchange liquidity. Forced sellers may crystallise losses.
Transparency: Quarterly assurance provides evidence, but not continuous visibility. Broad categories such as “other investments” and secured loans still require judgment.
Regulation: Rules can change access, listings and redemption. MiCA led European providers to restrict non-compliant stablecoins, while US rules are moving toward dedicated prudential and reporting requirements.
Counterparties and custody: Reserves depend on banks, custodians and borrowers. Users holding USDT on an exchange also depend on that exchange’s solvency and withdrawal systems.
USDT Versus Money in a Bank Account
A bank deposit is a contractual claim on a regulated bank and may qualify for government deposit insurance within applicable limits. USDT is a token governed by Tether’s terms, eligibility checks and redemption procedures. Payment stablecoins are not automatically deposit-insured or guaranteed by the US government.
Backed by assets” does not mean “identical to cash.” Asset quality, liquidity, custody and legal availability all matter during mass redemptions.
USDT: More Stable, but Not Risk-Free
Tether appears financially stronger and more liquid than during its controversial early years. Treasury-heavy reserves, high earnings and a multi-billion-dollar buffer reduce—but do not eliminate—risk. USDT can be practical for trading, transfers and short-term settlement, yet it should not be treated as a risk-free substitute for insured savings. Safety ultimately depends on reserve liquidity, accurate reporting, regulatory access and the ability to redeem during market stress.