Stablecoin issuer Tether uses Deloitte for USAT reserve report

After saying for years that major accounting firms were unwilling to provide auditing services, Tether Holdings SA received a sign-off from Deloitte on the first-ever reserve report for its USAT stablecoin that was launched to comply with new U.S. regulations.

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The world’s largest accounting and professional services firm examined the report provided by Anchorage Digital Bank NA, which issues the token, according to a letter released Monday. Anchorage reported $17.6 million of reserve assets backing 17.5 million USAT redeemable tokens outstanding.

Stablecoins are cryptocurrencies meant to maintain a steady value, typically pegged to the U.S. dollar through reserves of cash or other assets. More than $300 billion are in circulation today — with El Salvador-based Tether’s main USDT token making up about 60% of that figure, or about $184 billion. The tokens have been heralded by some as the future of digital money, potentially allowing for faster cross-border transactions at cheaper costs.

Tether Chief Executive Officer Paolo Ardoino noted in the past that so-called Big Four firms were reluctant because of potential reputational risk, especially during the regulatory crackdown on the crypto industry during the Biden administration. Tether paid $41 million in penalties in 2021 to settle allegations by U.S. authorities that it had misrepresented its reserves. 

Third-party attestations are not the same as financial audits, as they are limited to a snapshot in time and may not allow full access to a company’s books. The quality of assets backing stablecoins like USDT came under intense scrutiny in recent years, as regulators grew concerned about the liquidity of operators’ reserves and if they could withstand mass redemption requests while under market pressure. An attestation of the reserves for USDT is conducted by the accounting firm BDO Italia.

Legislation passed by U.S. lawmakers last summer, known as the Genius Act, restricts what the reserves backing stablecoins can include. It also requires tokens whose circulation reaches above a certain size to transition to federal oversight. 

The launch of USAT marked the return of Tether to the U.S. market. In 2018, the firm stated that it stopped allowing U.S. customers to buy or redeem its tokens directly with the issuer. Its products remained accessible to investors through trading on crypto exchanges.