USDT is the largest stablecoin in circulation, with roughly $189.5B outstanding as of May 2026 (DeFiLlama). It has held its $1 peg for over a decade across multiple market crashes, exchange collapses, and one notable 2022 wobble. Tether's history with regulators and auditors is part of the public record and worth examining in detail. This article walks through what backs USDT, what the attestation reports do and do not cover, the 2021 CFTC and New York Attorney General settlements, why USDT is being delisted by European exchanges in 2025-2026, and the structural risk categories on the horizon.
USDT in one paragraph
USDT has redeemed at or near $1 for ten-plus years across $189B in supply, with one notable May 2022 wobble to roughly $0.95 that recovered within hours. The material risks are regulatory (not reserve-based): EU delistings under MiCA, US treatment under the GENIUS Act, and the lingering question of why Tether has never produced a full Big Four audit.
What backs USDT in 2026
According to Tether's most recent quarterly attestation from BDO Italia, the reserves backing USDT are dominated by US Treasury bills, with smaller allocations to secured loans, Bitcoin, gold, and other investments. The mix Tether publishes on tether.to/transparency typically looks like this:
US Treasury bills (direct + indirect via money-market funds and repo): roughly 80–84% of reserves
Secured loans: ~4–6%, loans collateralized by liquid assets
Bitcoin: ~4–5%, held as a strategic reserve
Precious metals (gold): ~3–4%
Other investments and corporate bonds: remainder
Reported "excess reserves", assets above the dollar value of USDT in circulation, have been in the $5-7B range across recent attestations. The attestation methodology and what it covers is the next section.
Attestation vs full audit, why the distinction matters
This is the single biggest point of confusion in USDT coverage. Tether publishes quarterly attestation reports from BDO Italia. It has never produced a full audit from a Big Four firm (Deloitte, EY, KPMG, PwC). The two are not the same thing:
Attestation is a point-in-time snapshot. The accountant confirms that, on a single day, the reported reserve figures match what was on the books. It does not test internal controls, custody arrangements, or whether the reserves were borrowed or rehypothecated for the rest of the quarter.
Audit is a continuous opinion over a period, typically a full fiscal year. It tests controls, samples transactions, verifies custody, and produces a formal opinion under PCAOB or equivalent standards.
Tether has said publicly that Big Four firms have been reluctant to take it on because of perceived reputational and regulatory risk in the broader crypto sector. The result for USDT holders is quarterly point-in-time confirmations from BDO Italia rather than a continuous audit opinion. USDC, by comparison, publishes monthly attestations from Deloitte and is moving toward a full audit as part of Circle's post-IPO reporting cycle.
The 2021 CFTC and NY AG settlements
In October 2021, the US Commodity Futures Trading Commission fined Tether $41 million for making "untrue or misleading statements" about its reserves between June 2016 and February 2019. The CFTC order found that Tether had claimed USDT was fully backed by US dollars when, for significant portions of that period, the reserves included unsecured receivables and non-cash assets.
Earlier in 2021, the New York Attorney General settled a separate investigation with Tether and Bitfinex for $18.5 million. The settlement covered the same window and additionally barred Tether and Bitfinex from doing business with New York residents going forward. Tether did not admit wrongdoing in either settlement but agreed to publish quarterly reserve breakdowns, which is the regime still in place today.
The structural takeaway: Tether's current quarterly attestation program was a settlement requirement, not a voluntary disclosure. The 2021 enforcement findings are part of the public record, and the BDO attestation regime now in place was the corrective measure.
The 2023 New York exit and 2024–2026 EU pressure
Tether stopped issuing USDT to US-based customers and exited most US-facing business in 2023, consistent with its NY AG settlement obligations. In 2025, the European Securities and Markets Authority (ESMA) finalized stablecoin rules under MiCA (Markets in Crypto-Assets), and Tether did not pursue an EU e-money or asset-referenced token license. European exchanges, including Binance, Kraken, Coinbase EU, and Crypto.com, began delisting USDT spot pairs for EU users through late 2024 and 2025.
In the US, the GENIUS Act of 2025 created a federal framework for "payment stablecoins" requiring 1:1 reserve backing in HQLA, monthly attestations, and either federal or state regulator oversight. Tether has not signaled it intends to register as a US payment stablecoin issuer. The practical effect: USDT remains the dominant offshore stablecoin while USDC and PYUSD operate inside the US perimeter.
Has USDT ever broken the peg?
Yes, briefly. The most notable incident was in May 2022 during the Terra/Luna collapse, when USDT traded as low as roughly $0.95 on some venues for several hours before snapping back to $1. CoinDesk and Kaiko both documented the dislocation. Smaller intraday wobbles (a few cents) have appeared during exchange outages and crypto-wide deleveraging events. Across ten-plus years, the peg has held in aggregate, but holders should not assume zero volatility, particularly during stress events when redemption queues lengthen.
Risk categories for USDT holders
The structural risk categories, in rough order of probability:
Regional regulatory ban with knock-on liquidity hit. If a large jurisdiction (the EU is the live example) fully blocks USDT from exchanges, secondary-market liquidity contracts and the peg can wobble during the adjustment period.
Reserve mark-to-market loss. Tether's reserves include Bitcoin (~4%) and secured loans. A sharp BTC drawdown plus loan losses would erode the excess-reserve cushion. The base T-bill book is short-duration and low-volatility.
Redemption run. Tether only redeems directly with verified institutional counterparties, with minimums historically around $100,000. Retail holders exit through exchanges, not Tether. A coordinated institutional redemption wave could stress liquidity even if reserves are sufficient.
Audit-driven confidence shock. Any future enforcement action or attestation discrepancy could trigger a peg break similar to USDC's March 2023 wobble after Silicon Valley Bank, even if reserves are ultimately fine.
USDT vs USDC: structural comparison
Dimension | USDT | USDC |
Issuer | Tether (BVI / El Salvador) | Circle (US, publicly traded) |
Reporting | Quarterly attestation, BDO Italia | Monthly attestation, Deloitte |
Full audit | Never produced | Moving toward annual audit |
Reserve mix | ~80% T-bills, plus BTC, gold, secured loans | ~100% cash + short-duration T-bills |
US regulatory status | Not GENIUS Act registered | GENIUS Act compliant |
EU (MiCA) | Not licensed; being delisted | MiCA-licensed (e-money token) |
Past enforcement | 2021 CFTC ($41M), NY AG ($18.5M) | None material |
Peg history | ~$0.95 low in May 2022 | ~$0.87 low March 2023 (SVB) |
Circulating supply | ~$189.5B | ~$78.1B |
Neither is risk-free. USDC carries banking-rail risk (the SVB episode was a US-banking failure, not a USDC failure). USDT carries regulatory-tail risk and the attestation-vs-audit gap. For US and EU users with regulatory exposure, USDC is the cleaner choice. For global trading and emerging-market dollar access, USDT remains the dominant rail.
USDT structural summary
USDT's track record is real: ten-plus years at peg, $189B in circulation, dominant share in offshore crypto trading and emerging-market remittances. The reserve mix today is conservative by historical standards. The remaining risk is concentrated in two places: the absence of a Big Four audit and the regulatory squeeze in the EU and US. USDT carries a multi-year operational track record on trading and short-duration use. For long-duration savings or large balances, diversifying between USDT, USDC, and bank dollars is the prudent move. See support/en/articles/15082537 for the head-to-head and support/en/articles/15082534 if you're deciding where to acquire it.
Methodology and sources
USDT supply from DeFiLlama stablecoins API (May 2026 snapshot). Reserve composition from Tether's transparency page (tether.to/transparency) and BDO Italia Q1 2026 attestation. Enforcement history from CFTC press release "CFTC Orders Tether and Bitfinex to Pay Fines Totaling $42.5 Million" (October 15, 2021) and NY AG press release "Attorney General James Ends Virtual Currency Trading Platform Bitfinex's Illegal Activities in New York" (February 23, 2021). MiCA stablecoin rules from ESMA published technical standards (2024–2025). US GENIUS Act text via Congress.gov. Depeg event coverage from CoinDesk and Kaiko market reports (May 2022, March 2023).