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Tether Receives Fourth Audit, But Transparency Concerns Regarding USDT Persist

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By the end of 2025, Tether's reserve assets exceeded its liabilities, totaling $6.814 billion.

Original Article Title: "Tether Finally Completes Big Four Audit, But USDT Transparency Concerns Are Far From Over"
Original Article Author: Xiaobing, DeepTech TechFlow

A decade of questioning, finally answered.

On August 13, Tether announced that KPMG US had completed the first-ever 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 praise an auditor can give, indicating that KPMG believes Tether's financial statements fairly represent the company's financial position, operating results, and cash flows in all material respects in accordance with US Generally Accepted Accounting Principles (GAAP).

The audit covered the balance sheet, income statement, statement of changes in equity, and statement of cash flows. The auditors physically counted and verified each gold bar held by Tether, validating underlying evidence of transaction records, systems, valuations, counterparties, and asset ownership. The audit results showed that as of the end of 2025, Tether's reserve assets exceeded liabilities by $6.814 billion.

CEO Paolo Ardoino, in a post on Twitter announcing this result, displayed an unusually confident tone. He referred to it as the "largest-ever 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. By carefully dissecting the content and scope of this audit, one can see the most subtle and crucial part of the USDT transparency issue.

Audit and Attestation Are Two Completely Different Things

Let's first clarify a fundamental concept.

Over the past few years, Tether has released quarterly reserve attestation reports issued by BDO Italy. These reports verify whether Tether's reserve assets at a specific point in time cover the issued token liabilities. It's 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 full financial statement audit is not just about counting how much money is in the safe; it's about examining the source of this money, the flow path, ownership records, valuation methods, and the integrity of the entire financial reporting system. Auditors need to sample to verify transactions, assess internal controls, determine the appropriateness of accounting policies, and examine whether related party transactions are adequately disclosed.

This is also why Tether took ten years to get to this point. In 2017, Friedman LLP was terminated, in 2021, MHA Cayman (later integrated into the BDO network) was hired to conduct attestation, in 2024, SOC 2 Type 1 information security audit was completed, in March 2026, the hiring of one of the Big Four for a full audit was announced, with PwC involved in preparing the internal systems for compliance. Every step on this path has been paving the way for the final audit.

From attestation to audit, this leap is a substantial progress for Tether. However, from the perspective of investors and regulators, there are several questions that need to be further explored.

Five Questions Still Needing Answers

Where is the audit report itself?

As of the time of writing, Tether has announced the completion of the audit and KPMG's unqualified opinion but has not provided the full KPMG audit report to the public or the media. CoinDesk has inquired with Tether if they will release the complete KPMG audit document but has not received a response. The value of an audit report lies not only in the conclusion page but also in the footnotes, accounting policy explanations, key audit matters, breakdown of reserve asset categories, and related party transaction disclosures. By only publishing the conclusion and not the full report, external analysts cannot independently verify those critical details.

What is the scope of the audited entity? The entity audited by KPMG is "Tether International, S.A. de C.V." Ardoino told The Block that this is the entity responsible for USDT issuance, and the audit covered all financial data. However, Tether's group structure is much more complex than a single entity. The parent company Tether Holdings Limited (registered in BVI), Tether Operations Limited, Tether Investments Limited, Tether Gold-related entities, among others, form a multi-layered holding structure. In the previous attestation report by BDO, the assets of Tether Investments Limited were explicitly excluded from the "reserve" definition. Whether KPMG's audit scope aligns with BDO's attestation coverage, whether intra-group related-party transactions have been thoroughly examined within the audit scope, these are questions that require the full report for assessment.

A Rapid Decrease in the $6.8 Billion Reserve Buffer. At the end of 2025, the reserve exceeded liabilities by $6.814 billion, as confirmed by a KPMG audit. By the first quarter of 2026, BDO attestation showed this number had risen to around $7.1-8.2 billion (different data sources vary). However, by the second quarter of 2026, BDO attestation indicated that the reserve buffer had decreased to $4.11 billion, a reduction of about 40% from the KPMG audit point.

Credit and Concentration Risks of the Reserve Assets Have Not Disappeared Post-Audit. An unqualified opinion means the financial statements are fairly presented, not that the reserve assets are without risk. As of the first quarter of 2026, around 80-83% of Tether's reserves are in U.S. treasuries, 5-7% in overnight reverse repos, 3-5% in money market funds, with additional holdings in gold (over 146 tons), Bitcoin, and secured loans. Secured loans have long been a focus of external scrutiny. By the end of 2023, Tether had pledged to eliminate this asset class, yet as of mid-2024, $5.5 billion still remained. Questions around who the loans are extended to, the collateral involved, and the concentration levels have always had limited disclosure in attestations. A full audit report, if made public, should provide a more granular breakdown in the notes.

Audit Timing and Going Concern Issue. This audit corresponds to financial data from 8 months ago. During these 8 months, USDT's circulation increased from around $144 billion to over $184 billion, adding approximately $40 billion. For a financial institution whose balance sheet is expanding at such a pace, the timeliness of an annual audit is inherently discounted. Will Tether commit to having KPMG continue to audit its 2026 figures? Will the audit frequency be increased to semi-annual or even quarterly? These questions remain unanswered by Tether.

A Key Move in the Regulatory Chessboard

Understanding the strategic significance of this audit requires placing it within a broader regulatory landscape.

In July 2025, the U.S. President signed the GENIUS Act, establishing a federal stablecoin regulatory framework. The law mandates that compliant issuers must hold a 1:1 reserve of cash or short-term treasuries, publish monthly reserve attestations, and undergo annual audits. However, crucially, the audit requirements of the GENIUS Act do not automatically apply to overseas issuers. Tether is headquartered in El Salvador and is not a U.S.-registered entity.

The bill sets a pathway for foreign issuers: the U.S. Treasury Department must make a reciprocity determination, assessing whether the regulatory framework in the issuer's home country is "comparable" to that of the U.S. As of mid-2026, this determination is still pending approval. Senator Jack Reed has even proposed the Foreign Stablecoin Transparency Act, aiming to close the regulatory gap for foreign issuers left by the GENIUS Act.

Against this backdrop, Tether receiving an unqualified opinion from KPMG is undoubtedly a strong move. The signal it sends to U.S. regulators is that even without a legal requirement, Tether is proactively raising transparency standards and aligning itself with the most rigorous audits. Additionally, in January 2026, Tether launched the USAT token specifically for the U.S. market through Anchorage Digital Bank as a compliant Plan B.

However, there is still a gap between completing the audit and regulatory compliance. The GENIUS Act has given digital asset service providers a three-year transition period (until July 2028), after which non-compliant stablecoins will be prohibited from trading on U.S. platforms. The clock is ticking, and Tether's audit is just one of the necessary clearance conditions.

Amidst all the noise, this audit indeed confirms several key points.

At least by the end of 2025, Tether was able to demonstrate to the highest audit standards globally and received the highest praise. This is no easy feat. KPMG would not risk its reputation to issue a false opinion to a $180 billion financial entity. After all, Andersen fell due to the Enron audit scandal, and the Big Four cherish their reputation more than anyone.

The audit also confirmed that Tether has a substantial cushion beyond its liabilities, with the reserve structure predominantly in U.S. treasuries and the gold holdings physically verified. For a company long questioned about "whether it has the reserves," this is the most compelling answer to date.

Ardoino said this is not the endpoint; it is the "beginning of the next phase of the journey," and indeed it is. The real test starts from the moment the full audit report is publicly available.