Tether’s 2025 sees profits down, loans up, controversy constant

Tether reported a significant drop in its 2025 profits, while both Tether and rival stablecoin issuer Circle (NASDAQ: CRCL) are being criticized for failing to help victims of crypto crime get their money back.

Tether’s latest quarterly ‘attestation’ (not an audit) of the reserves backing the $186.5 billion in circulating USDT as of December 31, 2025, shows the company continuing to tinker with its asset mix amid growing regulatory scrutiny of its operations.

As always, bear in mind that the figures cited in this attestation represent a one-day snapshot provided by Tether to BDO Italia, which makes no guarantees regarding what Tether’s assets looked like on any day before or after December 31.

The bulk of Tether’s reserves continues to (allegedly) consist of U.S. Treasury bills, which totaled $122.3 billion at the end of Q4 (up from $112.4 billion in Q325 and from $94.5 billion in Q424). Combined with $19.3 billion in overnight reverse repurchase agreements (+$1.3 billion from Q3), Tether claims over $141 billion in “direct and indirect Treasury exposure,” up from just $80.3 billion a year ago.

You’ll recall that Tether’s aversion to formal audits means the only guarantee of Tether’s T-bill ownership comes from Howard Lutnick, founder of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX), which allegedly custodies these T-bills. Cantor also holds a ‘convertible bond’ with Tether, believed to be worth ~5% of the company.

Then again, Lutnick—who currently serves as U.S. Commerce secretary—also claimed that he cut off all contact with disgraced financier/predator Jeffrey Epstein back in 2005. This claim has since been disproven following last week’s release of Epstein emails by the U.S. Department of Justice (DoJ) that showed Lutnick was scheduled to have drinks with Epstein in 2011 and pay a visit to Epstein’s notorious island in 2012. (Lutnick is not alone in his conflicting statements regarding his Epstein associations.)

Getting back to Tether’s reserves, the company appears to have completely shed the $6.4 billion in money market funds it held in Q3, while its term reverse repurchase agreements grew by about $2.5 billion to $5.5 billion.

Tether also eliminated nearly $48 million in non-U.S. treasury bills, grew its cash position by $4 million to $34 million, reduced its corporate bonds from $14.7 million to just $3 million, while the mystery meat known as ‘other investments’ declined by over $1.1 billion to $2.76 billion.

Tether’s stash of ‘precious metals’ rose by more than one-third to $17.45 billion. Last week, Tether revealed that it holds ~$24 billion worth of gold, although this was prior to the metal abruptly shedding one-fifth of its value this weekend (following an even greater price increase in recent weeks).

Tether’s stack of the BTC token was worth $8.4 billion as of December 31, down from $9.85 billion at the end of Q3. (BTC’s price on September 30 was $114,160, while the Q4 report puts the figure at $87,647 as of December 31.)

But the most controversial element of Tether’s balance sheet remains its ‘secured loans,’ which shot up by $2.4 billion in just three months, boosting the total outstanding to just over $17 billion. That makes nearly $7 billion in new loans to parties unknown in the second half of 2025, despite Tether’s long-abandoned promise to purge the loans from its balance sheet three years ago.

Tether used to dismiss concerns over this broken promise by noting that its ‘equity’ (the surplus of its assets to the amount of issued USDT) was greater than the total of these loans, which Tether insists are “over-collateralized by liquid assets subject to margin call and liquidation mechanisms.” Tether’s equity stood at $6.4 billion as of December 31, a little more than one-third of its current loan total.

Recall that Tether loaned over $1.8 billion in USDT to the Celsius Network prior to the latter’s bankruptcy in 2022. Celsius reportedly provided $2.6 billion worth of BTC to Tether as collateral for those loans. Given the recent plunges in the fiat value of BTC (-40% since October) and Ethereum’s ETH (-50% over the same span), it’s worth wondering how ‘over-collateralized’ these new loans might be.

Meanwhile, the ‘cash & equivalents’ share of Tether’s overall assets continues to shrink, falling nearly a full point from Q3 to 76.3%. In December, that declining metric pushed the S&P Global ratings agency to label Tether’s stability as ‘weak’ and to warn that further declines in the value of non-cash assets like BTC could leave USDT undercollateralized.

Tether’s PR celebrated its “net profits exceeding $10 billion in 2025,” omitting the fact that it claimed $10.1 billion in profits in its Q3 report. The actual profit figure for Q4 stood at a mere $30 million and would likely have been a net negative had the rising price of Tether’s physical gold not offset the corresponding plunge in the value of its ‘digital gold’ (BTC).

While 2025’s $10 billion profit is below the $13 billion profit the company claimed in 2024, Tether notes that its attestation doesn’t include its Tether Global Investment Fund, a portfolio the company claims was worth over $20 billion at the end of last year.

Tether did have reason to celebrate USDT’s market cap growing by nearly $50 billion last year, more than twice the amount added by Tether’s closest stablecoin rival, USDC (issued by Circle). However, USDC’s 2025 market cap gains were significantly greater in percentage terms.

Tether, Circle accused of screwing over crypto crime victims

On February 1, TechCrunch published a profile of Tether CEO Paolo Ardoino, detailing his company’s transition from regulatory pariah to a major player in the current U.S. federal government’s digital asset makeover. That includes last week’s launch of USAT, Tether’s new U.S.-focused stablecoin that reportedly meets the regulatory requirements of the GENIUS Act that Congress approved last summer.

Those GENIUS requirements include complying with U.S. law enforcement ‘requests’ to freeze stablecoins linked to criminal activities, be it money laundering, sanctions evasion, ‘pig butchering’ scams, or terrorist financing. Individuals/entities that engage in these illegal activities have made ample use of USDT over the years.

Ardoino claimed that Tether has frozen $3.5 billion in USDT over the years, most of it linked to scams/hacks. Ardoino noted that Tether “onboarded the FBI and the Secret Service” in December 2023 (albeit after years of insisting it was jurisdictionally immune). Ardoino added that “we follow” the sanctions guidelines of the Treasury Department’s Office of Foreign Assets Control (OFAC), again, after long denying OFAC’s authority. 

But in a letter to Democratic senators in Congress recently obtained by CNN, New York state prosecutors—including Attorney General Letitia James, Manhattan district attorney Alvin Bragg, and three other DAs— allege that neither Tether nor Circle is doing a good enough job of looking out for crypto crime victims. The prosecutors claim that some of the fault lies with the GENIUS Act’s lack of specifics on returning stolen assets to victims.

The letter says the absence of language detailing a specific process by which stablecoins—to which criminals often convert stolen cash and other tokens—are frozen and returned to victims “will embolden stablecoin issuers, and even provide legal cover, when they affirmatively decide to keep stolen funds and proceeds under their control rather than returning them to victims.”

As a result, “[t]he reality for many victims, therefore, is that funds stolen in or converted to USDT will never be frozen, seized, or returned. [Stablecoin issuers] currently decide on a case-by-case basis when they will assist law enforcement in recovering funds for victims, and nothing prevents them from stopping all reissuance entirely.”

It’s worth noting that the NYAG’s office fined Tether $18.5 million in 2021 and barred it from operating in the state after catching the company lying about USDT always being backed 1:1 with U.S. dollars.

Circle has long been accused of being slow to act in response to hacks and exploits of digital asset platforms. These delays can be crucial, as the general pattern is for stolen tokens to be swiftly converted to other digital assets and then funnelled into coin mixing services that further obfuscate their trail.

Tether issued a statement to CNN saying it “does not have a blanket legal obligation to comply with state-level civil or criminal processes in the way a U.S.-regulated financial institution would.” The statement reflects Tether’s desire to draw a sharp line between its new GENIUS-compliant USAT token and its primary USDT token, which the company insists is focused on international markets.

(Interestingly, USAT now has friends in even higher places to protect it from blowback. The new stablecoin is nominally issued by Anchorage Digital, the first crypto firm to receive a U.S. national bank charter. Kevin Warsh, who President Trump just nominated to be the next chairman of the U.S. Federal Reserve, was, until recently, a longtime Anchorage advisor.)

Circle’s chief strategy officer, Dante Disparte, claimed his company “has always prioritized financial integrity and advancing U.S. and global regulatory standards for stablecoins … we have followed prevailing rules as a U.S. regulated financial institution, and we will continue to advance these standards.”

If you weren’t already aware, there is zero love lost between Circle and Tether, as Circle previously tried to get the U.S. government to target Tether more forcefully. In response, Ardoino has accused Circle of trying to “kill us” and has framed USAT as a deliberate effort to steal U.S. market share from USDC.

Ardoino’s TechCrunch interview was conducted before the NYAG letter came to light, but when asked about Circle’s more ‘regulatory compliant’ reputation, Ardoino offered this tart response: “Sometimes you are painted in a different light if you don’t bend the knee to Wall Street.”

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Visa doesn’t see stablecoins’ product fit in developed markets

The prosecutors’ letter cast a negative shadow over what Circle hoped would be a focus on its newly released stablecoin infrastructure plans for 2026. These plans largely focus on previously announced initiatives, including the proprietary Layer-1 Arc, the Circle Payments Network, the StableFX “institutional-grade 24/7 stablecoin FX engine,” and the USYC tokenized money market fund.

Circle is hoping to convince institutions to choose to ride on its stablecoin rails rather than go to the trouble of building their own. But while institutions may be interested in stablecoins’ potential to accelerate settlement transfers (and conduct them 24/7), it remains to be seen whether stablecoins will find other significant use cases in developed Western countries.

More and more studies show actual payments for goods and services remain statistical afterthoughts compared to stablecoins’ main use case: serving as one-half of a trading pair for other digital assets. Stablecoin payments and remittances look even tinier as a share of overall fiat volume, although these figures have grown significantly in recent years.

Circle has partnered with tradfi payments giant Visa (NASDAQ: V) on several stablecoin initiatives, including allowing businesses and platforms using Visa Direct to send and receive payments in USDC. That’s just one of Visa’s growing number of stablecoin partnerships, but even Visa CEO Ryan McInerney isn’t sure uptake will be massive. At least, not in all markets.

Asked about his company’s stablecoin outlook on last week’s earnings call, McInerney said stablecoins “have tremendous growth and disruption potential, but are still in the very early stages of adoption for payments use cases.” Visa now offers stablecoin card issuance in over 50 countries, and “financial institutions, merchants, acquirers, and consumer-facing technology companies are looking to develop and refine their stablecoin strategy.”

Visa recently launched its Stablecoins Advisory Practice, providing clients with “access to training, strategy and market entry planning and technology enablement … supporting both transaction processing and delivering value-added services.”

McInerney sees stablecoin opportunities for Visa in “improving speed and liquidity for banks and fintechs and providing interoperability to modernize treasury operations for our clients.” But McInerney stated plainly that “we don’t see a lot of product market fit in developed digital payment markets like the United States or the UK or Europe for stablecoin payments.”

In these markets, consumers “can pay from their checking account or their savings account … so we don’t see a lot of product market fit for stablecoin payments and consumer payments in digitally developed markets.”

Mastercard (NASDAQ: MA) is also rapidly expanding its stablecoin activities, as CEO Michael Miebach detailed on his company’s recent earnings call. Miebach acknowledged that the predominant stablecoin use case at present is “for trading and the like,” but Mastercard views the technology as “another currency we can support within our network.”

Miebach claimed his company has “made good traction enabling the purchase of [stablecoins], facilitating transactions and supporting stablecoins for settlement over our network.” However, Artemis Analytics recently found that Visa had captured “over 90% of on-chain card volume” based on its strategy of partnering with infrastructure providers, while Mastercard has put more effort into partnering with other firms on co-branded payment cards.

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USDC’s DeFi dominance helps Base surpass Ethereum, Tron

Finally, USDC’s enduring popularity on decentralized finance (DeFi) platforms was on full display in new research by Ark Invest. Ark’s DeFi Quarterly report for the final three months of 2025 showed USDC accounting for over 60% of adjusted stablecoin transaction volume, despite USDC claiming only around one-quarter of the overall stablecoin market cap.

USDC’s Q4 ‘velocity’ (volume-to-supply ratio) was up 39% from Q3 to $88, vastly outpacing the $22 of velocity runner-up PYUSD issued by payments giant PayPal (NASDAQ: PYPL). However, PYUSD enjoyed the largest quarterly velocity improvement, up an impressive 2.5x from Q3.

USDC’s popularity also helped the Base network take the lead in stablecoin transaction volume in the final quarter of 2025. Base, the Ethereum layer-2 network launched by the Coinbase (NASDAQ: COIN) digital asset exchange, handled ~$3 trillion in stablecoin volume in the three months ending December 31, up 121% from Q3’s total.

Base’s stablecoin surge allowed it to eclipse both the Ethereum and Tron networks, which reported stablecoin transaction volumes of $2.7 billion and $2 billion, respectively. However, both Base and the Solana network reported quarter-on-quarter declines in the number of active addresses, falling 17% and 23%, respectively. Binance’s BNB Chain and Tron remain the networks with the most active addresses.

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