"Tether no longer looks like a simple stablecoin company. It runs a balance sheet packed with short-term US Treasurys, reverse repos, gold and even Bitcoin ( BTC). It mints and redeems dollars at scale and can freeze addresses at the request of law enforcement. That is why both critics and supporters say Tether is behaving like a private dollar-linked central bank for parts of the crypto economy, though without a sovereign mandate or safety net."
"In practice, Tether does four things that resemble central bank behavior. First, it issues and redeems money on demand. Verified customers mint new USDT by wiring in fiat and redeem it by sending USDT back for dollars. This primary market expands or contracts supply, while secondary-market trading occurs on exchanges. The actual balance sheet changes take place within that mint and redeem pipeline."
Tether holds $181.2 billion in reserves against $174.5 billion in liabilities, leaving $6.8 billion excess and over $174 billion USDT circulating. The reserves are concentrated in short-term U.S. Treasurys, reverse repos, gold, and Bitcoin, generating more than $10 billion in interest income so far in 2025. Tether mints and redeems USDT on demand for verified customers, altering supply via the primary market, while secondary-market trading occurs on exchanges. Tether can freeze sanctioned wallets, change supported blockchains, and allocates up to 15% of profits to Bitcoin. Tether lacks a sovereign mandate or backstop and relies on attestations and private counterparties.
Read at Cointelegraph
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