Tether has finally obtained audits from the Big Four, but the transparency issues surrounding USDT are far from over

Author: Xiao Bing, Shenchao TechFlow

Ten years of inquiry, one day of realization.

On August 13, Tether announced that KPMG US had completed the first independent audit of Tether International, S.A. de C.V.'s financial statements as of December 31, 2025, issuing an unqualified opinion. This is the highest evaluation that an independent auditor can provide, meaning KPMG believes that Tether's financial statements fairly present the company's financial position, operating results, and cash flows in all material respects in accordance with US 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, verifying 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 exceed liabilities by $6.814 billion.

CEO Paolo Ardoino announced this result on X with a rare sense of enthusiasm. He called it "the largest initial financial audit in history" and directly rebutted critics who have questioned Tether for years.

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

Audit and Attestation Are Two Completely Different Things

First, let's clarify a basic concept.

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

What KPMG did this time is entirely different. A complete financial statement audit is not just about counting how much money is in the safe, but also examining the sources of that money, the flow paths, ownership records, valuation methods, and the integrity of the entire financial reporting system. Auditors need to sample transactions, assess internal controls, judge the appropriateness of accounting policies, and check whether related party transactions are adequately disclosed.

This is also why it took Tether ten years to reach this point. In 2017, Friedman LLP was terminated, in 2021 MHA Cayman (later merged into the BDO system) was re-engaged 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 conduct a comprehensive audit, with PwC participating in the compliance preparation of internal systems. Each step along this path laid the groundwork for the final audit.

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

Five Questions That Still Need 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 but has not provided the full text of the KPMG audit report to the public or media. CoinDesk has inquired whether Tether will release the complete KPMG audit documents but has not received a response. The value of an audit report lies not only in the conclusion page but also in the notes, accounting policy explanations, key audit matters, detailed classifications of reserve assets, and disclosures of related party transactions. By only publishing the conclusion without the full report, external analysts cannot independently verify the most critical details.

What are the boundaries of the audit entity? The entity audited by KPMG is "Tether International, S.A. de C.V." Ardoino told The Block that this is the issuer of 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 (BVI registered), 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 related party transactions within the group were adequately examined in the audit are questions that require the complete report to assess.

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

The credit and concentration risks of reserve assets have not disappeared due to the audit. An unqualified opinion means that the financial statements are fairly presented, but it does not mean that the reserve assets are without risk. As of the first quarter of 2026, approximately 80-83% of Tether's reserves were US Treasury bonds, 5-7% were overnight reverse repos, 3-5% were money market funds, and there were also gold (over 146 tons), Bitcoin, and secured loans. The category of secured loans has long been a focal point of external concern. At the end of 2023, Tether promised to eliminate this portion of assets, but as of mid-2024, there were still $5.5 billion. Questions about who the loans are to, what the collateral is, and the concentration remain limited in disclosure in the attestation. A complete audit report, if made public, should provide more detailed classifications in the notes.

The timing and continuity of the audit. 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 whose balance sheet is expanding at such a pace, the timeliness of an annual audit is inherently diminished. Will Tether commit to continuing the audit by KPMG for the year 2026? Will the audit frequency increase to semi-annual or even quarterly? Tether has not yet responded directly to these questions.

Key Moves in the Regulatory Chess Game

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

In July 2025, the US President signed the GENIUS Act, establishing a federal regulatory framework for stablecoins. 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 US-registered entity.

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

In this context, Tether obtaining KPMG's unqualified opinion is undoubtedly a strong card. It sends a signal to US regulators that even without legal mandates, Tether is proactively raising transparency standards and aligning with the strictest audits. At the same time, Tether launched the USAT token aimed at the US market through Anchorage Digital Bank in January 2026 as a compliant Plan B.

However, there remains a distance between the completion of the audit and regulatory compliance. The GENIUS Act gives digital asset service providers a three-year transition period (until July 2028), after which non-compliant stablecoins will be banned from being listed on US trading platforms. The clock is ticking, and Tether obtaining the audit is just one of the necessary conditions for passing through.

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

At least as of the end of 2025, Tether has the capability to present its financial statements to the world's strictest audit standards and receive the highest evaluation. This is not an easy task. KPMG would not risk its reputation by issuing a false opinion to a $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.

The audit also confirmed that Tether has a substantial buffer exceeding its liabilities, with a reserve structure dominated by US Treasury bonds, and the gold holdings have been physically counted. For a company that has long been questioned about whether its reserves actually exist, this is the most powerful answer to date.

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