Key insights
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Tether has a balance sheet with many treasury and repo transactions and holds $181.2 billion in reserves against $174.5 billion in liabilities, leaving a surplus of $6.8 billion.
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High rates of interest have converted these reserves into profits, generating greater than $10 billion in interest income thus far in 2025, unusual for a typical crypto issuer.
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It exerts political leverage by freezing sanctioned wallets, moving supported blockchains, and allocating as much as 15% of profits to Bitcoin.
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The central bank comparison has limits. Tether has no public mandate or backstop, relies on attestations somewhat than full audits, and relies on private counterparties.
Tether not looks like an easy stablecoin company. The balance sheet is loaded with short-term US Treasuries, reverse repos, gold and even Bitcoin (BTC). It mints and redeems dollars on a big scale and might freeze addresses on the request of law enforcement.
The latest certification shows $181.2 billion in reserves against $174.5 billion in liabilities, leaving a surplus of $6.8 billion and greater than $174 billion in USDt (USDT) outstanding. Given the high rates of interest, this financial bond-heavy portfolio has generated over $10 billion in profits thus far in 2025, a figure more typical of a financial institution than a crypto startup.
For this reason, each critics and supporters say that Tether is behaving like a non-public, dollar-pegged central bank for parts of the crypto economy, albeit and not using a government mandate or safety net.
Behaving like a central bank: what does that mean?
In practice, Tether does 4 things which might be just like the behavior of a central bank.
First, it issues and redeems money on demand. Verified customers mint recent USDT by transferring it into fiat currency and redeem it by sending USDT back for dollars. This primary market expands or shrinks supply, while secondary market trading takes place on exchanges. The actual balance sheet changes occur inside this Mint and Redeem pipeline.
Second, it manages reserves like a hard and fast income desk, parking most assets in short-dated U.S. Treasury bonds and repos, in addition to some gold and Bitcoin. A portfolio heavy on Treasury bonds preserves liquidity and ensures regular demand for T-bills, which bond departments at the moment are actively pursuing as they discover major buyers of U.S. debt.
Third, it deserves something resembling seigniorage in a high rate of interest environment. Users own a non-interest bearing token while Tether collects interest on T-Bills, leading to greater than $10 billion in profits and $6.8 billion in excess reserves as of the third quarter of 2025. This income is why the “private central bank” comparison is popular.
Finally, it leverages policy-like tools comparable to contract features that may freeze addresses on the request of law enforcement or sanctioning authorities. There can also be the flexibility so as to add or remove blockchains to transact for instance Omni, BCH-SLP, Kusama, EOS and Algorand to oversee operational risk.
While this isn’t sovereign monetary policy, it still represents an lively intervention in a dollar-like asset utilized by a whole bunch of hundreds of thousands of individuals.
Did you realize? Tether was originally launched as Realcoin in July 2014 and was renamed Tether in November of the identical yr. It stays one in all the oldest stablecoins still in lively use today.
Expanding policy levers just like central bank instruments
Tether is now intervening in its own dollar system in a way that resembles political instruments.
On the compliance page, addresses could be frozen in reference to sanctions or law enforcement actions. The company first introduced a proactive wallet freezing policy in December 2023 and has since used it in certain cases, comparable to wallets tied to the sanctioned Russian exchange Garantex. These are issuer-level interventions that directly impact who can move dollar liquidity on the chain.
On the market operations side, Tether's reserves are managed like a short-term fixed income portfolio, heavily tilted towards US Treasuries and reverse repos. This structure allows minting and redemption activities to be tailored to highly liquid assets that earn interest while maintaining flexibility.
According to Tether's latest statement, this mix helped generate billions of dollars in profits and a big buffer of excess reserves. These mechanisms are just like open market-style management, although Tether remains to be a non-public issuer and never a central bank.
Tether also defines its own scope of operations. Blockchains have been added and removed to pay attention activity where usage and infrastructure are strongest. Minting and subsequent support for legacy networks comparable to Omni, BCH-SLP, Kusama, EOS and Algorand ceased, while withdrawals continued during a transition period.
Separately, it’s diversifying reserves by allocating as much as 15% of realized operating profits to Bitcoin, a policy introduced in 2023 that represents one other issuer-level decision with system-wide implications.
From stablecoin issuer to infrastructure player
Over the past 18 months, Tether has evolved from a single token company right into a broader financial infrastructure group.
In April 2024, the corporate was reorganized into 4 business units: Tether Finance, Tether Data, Tether Power and Tether Edu. These divisions manage Tether's digital asset services, data and AI projects (comparable to Holepunch and Northern Data), energy initiatives, and academic programs. The restructuring formalized a technique that goes well beyond issuing USDT.
On the energy side, Tether has provided capital and expertise to El Salvador's Volcano Energy, a 241-megawatt wind and solar farm designed to power one in all the world's largest Bitcoin mining operations. The project directly supports payment and settlement time. The company has also dropped support for several legacy blockchains to pay attention liquidity where tools and demand are strongest, a call for network operations with ecosystem-wide implications.
To directly goal the US market, Tether announced USAT (USAT), a planned US-regulated dollar token to be issued by Anchorage Digital Bank under domestic rules along with its existing offshore USDT. If launched as described, USAT would supply Tether with a compliant onshore platform while USDT would proceed to serve global markets.
Why the analogy breaks
Importantly, Tether isn’t a sovereign monetary authority.
It doesn’t set rates of interest, doesn’t act as a lender of last resort and doesn’t operate under a public mandate. Its transparency still relies on quarterly certifications somewhat than a full financial audit, although the corporate says it has been in discussions with a Big Four firm about auditing its reserves.
This gap between certification and audit is one in all the the explanation why critics reject the term “central bank.”
There are also accounting concerns. Tether has at times maintained a secured loan portfolio after previously saying it would cut back that risk. This investment category attracts particular attention because terms and counterparties are essential. More broadly, the corporate relies on private banking, custodian and repo counterparties somewhat than a government backstop, meaning trust and market infrastructure remain outside of its direct control.
Finally, a few of Tether's most policy-like actions are primarily compliance measures, comparable to proactively freezing addresses listed by sanctioning authorities.
Did you realize? In December 2023, Tether said it assisted greater than 140 law enforcement agencies in 45 jurisdictions in freezing $835 million related to fraud and illegal activities.
Where Tether matches into the larger picture
Ultimately, Tether looks less like a typical stablecoin issuer and more like a non-public, dollar-denominated central bank for crypto. It expands and contracts supply through large-scale minting and redemptions, holds short-term treasuries and repos, generates billions of dollars in interest income, and might take compliance actions when mandatory.
However, the analogy only goes thus far. There is not any public mandate or backing, transparency still relies on attestations, and their policy-like measures focus largely on compliance somewhat than macro-management.
Keep a watch on the reserve composition, profits, redemptions, audit progress and within the US, the event of the USAT plan with Anchorage, because there the story will either proceed to resemble the central bank or begin to diverge.
