Author: Xiaobing
A decade of questioning, a single day for resolution.
On August 13, Tether announced that KPMG US had completed its first independent audit of the financial statements of Tether International, S.A. de C.V. as of December 31, 2025, issuing an unqualified opinion. This is the highest rating an independent auditor can give, signifying that KPMG believes Tether's financial statements fairly present the company's financial position, results of operations, and cash flows in all material respects in accordance with US Generally Accepted Accounting Principles (US GAAP).
The audit covered the balance sheet, income statement, statement of changes in equity, and cash flow statement. Auditors physically counted and individually inspected each gold bar held by Tether, verifying the underlying evidence of transaction records, systems, valuations, counterparties, and asset ownership. The audit results show that as of the end of 2025, Tether's reserve assets exceeded its liabilities by $6.814 billion.
CEO Paolo Ardoino announced this result on X in an unusually triumphant tone. He called it "the largest initial financial audit in history" and directly countered Tether's many critics over the years.
The significance of this audit should not be underestimated, but it is not the finish line. Carefully dissecting the content and scope of this audit reveals the most subtle and crucial parts of USDT's transparency issues.
Audit and Attestation Are Two Completely Different Things
First, let's clarify a basic concept.
For the past few years, Tether has released quarterly reserve attestation reports issued by BDO Italy. These reports verify whether Tether's reserve assets cover its issued token liabilities at a specific point in time. It's akin to taking a snapshot of a safe: is the money there, and is it enough.
What KPMG has done this time is completely different. A full financial statement audit is not just about counting how much money is in the safe; it's about examining the source, flow, ownership records, valuation methods, and the integrity of the entire financial reporting system. Auditors must sample-test transactions, assess internal controls, judge the appropriateness of accounting policies, and check if related-party transactions are adequately disclosed.
This is also why it took Tether a decade to reach this point. Friedman LLP's engagement was terminated in 2017, MHA Cayman (later integrated into the BDO system) was appointed for attestation in 2021, SOC 2 Type 1 information security reviews were completed in 2024, the engagement of a Big Four firm for a full audit was announced in March 2026, and PwC was involved in preparing internal systems for compliance. Each step on this path laid the groundwork for the final audit.
For Tether, the leap from attestation to audit represents substantive progress. However, from the perspective of investors and regulators, several questions remain that demand further inquiry.
Five Questions That Still Need Answers
Where is the actual audit report?
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 text of KPMG's audit report to the public or media. CoinDesk inquired whether Tether would publicly release the complete KPMG audit document and has not yet received a response. The value of an audit report lies not only in the concluding page but also in the notes, accounting policy explanations, key audit matters, detailed classification of reserve assets, and related-party transaction disclosures. Publishing only the conclusion without the full report prevents external analysts from independently verifying those most critical details.
What are the boundaries 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 issuer of USDT and the audit covers all financial data. However, Tether's group structure is far more complex than a single entity. Parent company Tether Holdings Limited (registered in the BVI), Tether Operations Limited, Tether Investments Limited, Tether Gold-related entities, etc., form a multi-layered holding structure. In previous BDO attestation reports, assets of Tether Investments Limited were explicitly excluded from the definition of "reserves." Whether KPMG's audit scope aligns with the coverage of BDO's attestations and whether intra-group related-party transactions were sufficiently examined within the audit scope are questions that can only be judged by seeing the full report.
The $6.8 billion reserve buffer is rapidly shrinking. KPMG's audit confirmed reserve assets exceeding liabilities by $6.814 billion as of the end of 2025. By Q1 2026, BDO attestations showed this figure had risen to approximately $7.1-8.2 billion (varying by data source). However, by Q2 2026, BDO attestations indicated the reserve buffer had dropped to $4.11 billion, shrinking by about 40% from the KPMG audit date.
Credit and concentration risks in reserve assets have not disappeared with the audit. An unqualified opinion means the financial statements are fairly presented, not that the reserve assets are risk-free. As of Q1 2026, approximately 80-83% of Tether's reserves were US Treasuries, 5-7% overnight reverse repurchase agreements, 3-5% money market funds, with the remainder being gold (over 146 tons), Bitcoin, and secured loans. The "secured loans" category has long been a focal point for external scrutiny. Tether promised to eliminate this asset class by the end of 2023, but as of mid-2024, $5.5 billion remained. Questions about to whom the loans are made, the nature of the collateral, and the concentration levels have consistently received limited disclosure in attestations. A full audit report, if made public, should provide more detailed classification in its notes.
Audit timing and the issue of continuity. This audit corresponds to financial data from eight months ago. In these eight months, USDT's circulation has grown from about $144 billion to over $184 billion, an increase of approximately $40 billion. For a financial institution with a balance sheet expanding at such a speed, the timeliness of an annual audit is inherently diminished. Will Tether commit to having KPMG continue the audit for the 2026 financial year? Will the audit frequency increase to semi-annual or even quarterly? Tether has not yet directly addressed these questions.
A Key Move in the Regulatory Chess Game
To understand the strategic significance of this audit, one must place it in the larger regulatory landscape.
In July 2025, the US President signed the GENIUS Act, establishing a federal regulatory framework for stablecoins. The Act requires compliant issuers to hold 1:1 reserves in cash or short-term Treasury bills, publish monthly reserve attestations, and undergo annual audits. However, the key point is that the GENIUS Act's audit requirements do not automatically apply to foreign issuers. Tether is headquartered in El Salvador and is not a US-registered entity.
The Act provides a path for foreign issuers: the US Treasury Department must make a "reciprocity determination," deeming the regulatory framework of the issuer's home country "comparable" to that of the US. As of mid-2026, this determination was still pending. Senator Jack Reed even separately proposed the "Foreign Stablecoin Transparency Act," aiming to close the regulatory gap in the GENIUS Act for foreign issuers.
In this context, Tether obtaining an unqualified opinion from KPMG is undoubtedly a powerful card. It signals to US regulators that even without legal compulsion, Tether is proactively raising its transparency standards to align with the strictest audits. Simultaneously, in January 2026, Tether launched the USAT token specifically for the US market through Anchorage Digital Bank as a compliant Plan B.
But there remains a distance between audit completion and regulatory compliance. The GENIUS Act provides digital asset service providers with a three-year transition period (until July 2028), after which non-compliant stablecoins will be prohibited from being listed on US trading platforms. The clock is ticking, and Tether securing the audit is only one of the necessary conditions for clearance.
Filtering out all the noise, this audit indeed proves several important things.
At least as of the end of 2025, Tether had the capability to present its financial statements to the world's most rigorous audit standard and receive the highest rating. This is no easy feat. KPMG would not risk its reputation by issuing a false opinion for a $1.8 trillion financial entity. After all, Arthur Andersen fell due to the Enron audit scandal; the Big Four value their credibility more than anyone.
The audit also confirms that Tether holds a substantial buffer exceeding its liabilities, with a reserve structure dominated by US Treasuries and gold holdings physically verified. For a company long questioned about "whether its reserves even exist," this is the most powerful answer to date.
As Ardoino said, this is not the end but "the beginning of the next journey." Indeed, the true test begins the moment the complete audit report is made public.
