Stablecoin giant Tether has finally ventured into a full-blown financial audit. After years of criticism and suspicion, the company is looking for a Big Four auditor to confirm the security of its USDT coin.
Tether CEO Paolo Ardoino stated that conducting a full audit is the company's "top priority." He believes the process will be much easier with the support of new U.S. President Donald Trump, who is known for his pro-cryptocurrency sentiment.
"If the U.S. president says this is a top priority for the country, the Big Four audit firms will have to listen, so we're very happy with that," Ardoino told Reuters on March 21.
What is a Full Audit And Why Is It Important?
Tether currently publishes quarterly reports but does not undergo a full independent annual audit. The difference is significant - a full audit is much more extensive and provides more assurances to investors and regulators.
Tether claims that USDT maintains its stable value due to its 1:1 peg to the US dollar. This means that each USDT token is backed by reserves equivalent to its volume in circulation. These reserves include traditional currency, cash equivalents, and other assets.
Interestingly, Ardoino did not specify which of the Big Four accounting firms - PricewaterhouseCoopers (PwC), Ernst & Young (EY), Deloitte or KPMG - the company plans to work with. The Big Four are the four largest international audit and consulting firms.
Preparing For a Big Audit
In preparation for a full-scale financial audit, Tether hired Simon McWilliams as CFO in early March. Apparently, the company is serious about improving its reputation in the eyes of investors and regulators.
And for good reason. Tether's 2024 profit is an impressive $13.7 billion, making the company one of the most successful players in the cryptocurrency market.
But along with the success comes increasing demands for transparency.
Criticism and Mistrust: Is There Cause for Concern?
In September 2024, Cyber Capital founder Justin Bons expressed serious concerns about Tether's lack of transparency.
"[Tether] is one of the biggest existential threats to cryptocurrencies. We are led to believe that they are holding $118 billion dollars in collateral without any proof! And this is after (CFTC) fined Tether for lying about its reserves in 2021," Bones said.
Around the same time, consumer advocacy organization Consumers' Research published a report criticizing Tether for its lack of transparency.
The disbelief has a basis in fact. In 2021, the U.S. Commodity Futures Trading Commission (CFTC) fined Tether $41 million dollars for lying about fully backing USDT with reserves.
European Blowback
Adding to the audit problems are regulatory complications. Tether recently expressed frustration with new European regulations that forced exchanges such as Binance and Crypto.com to delist USDT and nine other tokens to comply with European MiCa requirements.
Tether's initiative to conduct a full audit could be a game changer for the stablecoin industry. If the largest stablecoin can prove its solvency, it will strengthen confidence in digital assets in general.
However, the key question remains open: are all 118 billion USDT tokens in circulation really backed by real dollars and assets? We will get the answer to this question after the audit is completed.
