Concerns about stablecoin issuer Tether\u2019s financial stability resurfaced this week after BitMEX founder Arthur Hayes warned the company could face serious trouble if the value of its reserve assets were to fall. But CoinShares\u2019 head of research, James Butterfill, pushed back on those claims.<\/p>\n
In a Dec. 5 market update<\/a>, Butterfill said fears over Tether\u2019s solvency \u201clook misplaced.\u201d<\/p>\n He pointed to Tether\u2019s latest attestation, which reports $181 billion in reserves against roughly $174.45 billion in liabilities, leaving a surplus of nearly $6.8 billion.<\/p>\n \u201cAlthough stablecoin risks should never be dismissed outright, the current data do not indicate systemic vulnerability,\u201d Butterfill wrote.<\/p>\n Tether remains one of the most profitable companies<\/a> in the sector, generating $10 billion in the first three quarters of the year \u2014 an unusually high figure on a per-employee basis<\/a>.<\/p>\n Related: <\/strong><\/em>Arthur Hayes tells Zcash holders to withdraw from CEXs and \u2018shield\u2019 assets<\/strong><\/em><\/a><\/p>\n While speculation about Tether\u2019s financial health<\/a> is hardly new \u2014 media outlets have probed its reserves and asset backing for years \u2014 the latest round of solvency worries appears to stem from Arthur Hayes.\u00a0<\/p>\n The BitMEX co-founder said last week that Tether was \u201cin the early innings of running a massive interest-rate trade,\u201d arguing that a 30% drop in its Bitcoin (BTC<\/a>) and gold holdings would \u201cwipe out their equity\u201d and leave its USDt (USDT<\/a>) stablecoin technically \u201cinsolvent.\u201d<\/p>\n Both assets make up a substantial portion of Tether\u2019s reserves, with the company increasing its gold exposure in recent years. <\/p>\n Tether is facing criticism from more than just Hayes. CEO Paolo Ardoino recently pushed back<\/a> on S&P Global\u2019s downgrade of USDt\u2019s ability to defend its US dollar peg, dismissing the move as \u201cTether FUD\u201d \u2014 shorthand for fear, uncertainty, and doubt \u2014 and citing the company\u2019s third-quarter attestation report in its defense.<\/p>\n S&P Global downgraded the stablecoin over stability concerns, citing its exposure to \u201chigher-risk\u201d assets such as gold, loans and Bitcoin.<\/p>\n Tether\u2019s USDt remains the largest stablecoin in the cryptocurrency market, with $185.5 billion in circulation and a market share of nearly 59%, according to CoinMarketCap<\/a>. <\/p>\nThe latest source of Tether anxiety<\/h2>\n