What Happened?
Tether achieved a record operating profit of over $1 billion in the first quarter of 2025, with total assets significantly exceeding liabilities, indicating a strong financial position. Notably, Tether’s holdings in U.S. Treasury securities approached $120 billion, marking a historical high. Despite its large scale, the circulating supply of USDT notably increased by about $7 billion in the first quarter, alongside the addition of millions of new user wallets. This reflects the growing trust and practicality of USDT as a digital dollar, solidifying its position as a gateway to the digital economy.
Tether and USDC dominate the U.S. dollar stablecoin market, with expectations of substantial market growth. However, regulatory bodies in regions such as Europe have expressed concerns over the excessive reliance on dollar stablecoins and the potential risks they pose to the global financial system. This indicates that despite Tether’s impressive performance, future development may still face challenges and discussions from regulatory perspectives.
Tether Releases Q1 2025 Financial Report
The world’s largest stablecoin issuer, Tether, recently released its financial report for the first quarter of 2025. The report was audited by BDO, one of the top five independent accounting firms globally, confirming the accuracy of Tether’s financial data and reserve reports, transparently revealing the asset details that support its fiat-collateralized stablecoin as of March 31, 2025.
Despite market volatility, Tether achieved record results in the first quarter. The report indicates that as of March 31, 2025, Tether experienced significant performance growth, primarily reflected in operational profits and robust reserve assets.
Core Financial Overview:
- Total Assets: $149.275 billion
- Total Liabilities: $143.683 billion (mainly corresponding liabilities for issued digital tokens, ensuring that all circulating USDT can be redeemed by holders for approximately equivalent U.S. dollars as promised.)
The report clearly states that Tether’s total assets exceed its total liabilities, demonstrating the company’s solid financial foundation and ample assets supporting its stablecoin. Additionally, the company holds $5.6 billion in excess reserves, which exceeds the amount needed to fully support the issued USDT, providing an additional safety buffer and liquidity assurance.
Profitability and Investment Performance:
In terms of profitability, Tether’s operational profit from traditional investments in this quarter exceeded $1 billion, primarily benefiting from the strong performance of its U.S. Treasury investment portfolio, particularly investments centered on U.S. Treasuries. The good performance of gold assets also nearly offset the impacts of cryptocurrency market volatility.
As of the end of the quarter, Tether held $5.6 billion in excess reserves. Although this is a decrease from $7.1 billion in Q4 2024, it still reflects the company’s strong risk management and ample liquidity situation.
Record U.S. Treasury Holdings:
The report shows that Tether’s total exposure to U.S. Treasuries reached an all-time high, nearing $120 billion. This includes approximately $98.5 billion in direct holdings of U.S. Treasury securities, with other cash-equivalent assets (such as repurchase agreements) exceeding $23 billion. The substantial Treasury holdings not only reflect Tether’s conservative reserve management strategy but also highlight its role as an important provider of dollar liquidity in the global financial system.
This is because U.S. Treasuries are regarded globally as one of the safest and lowest-risk investments, given they are debts issued by the U.S. government, making defaulting unlikely. Holding a large amount of U.S. Treasuries as reserves is akin to possessing the “safest” assets to back the value of every USDT. The greater the amount of Treasuries held, even setting new records, the more it reassures users holding USDT that their currency is stable and genuinely backed by secure assets, alleviating concerns about Tether’s ability to redeem 1 USDT for 1 U.S. dollar as promised.
With the continued demand for high-quality dollar assets, Tether is positioned at the intersection of traditional finance and digital tools, supporting the relevance of the dollar in the rapidly developing global economy.
USDT Popularity and User Growth:
The market demand for USDT remained strong this quarter. The circulating supply of USDT increased by approximately $7 billion, while the number of new user wallets added was estimated at around 46 million, a 13% increase compared to the previous quarter. These figures reflect the market’s trust in Tether’s transparency, resilience, and USDT as a digital dollar tool.
Tether believes this indicates a growing user trust in its transparency, resilience, and position as a leading representative of digital dollars, with USDT being viewed as a stable, efficient, and easy-to-use entry point into the global economy.
As of May 1, the market capitalization of USDT was approximately $149 billion.
Strategic Investment Layout:
In addition to reserve assets, Tether has also engaged in long-term strategic investments through its investment division in areas such as renewable energy, artificial intelligence, peer-to-peer communication, and data infrastructure, totaling over $2 billion allocated. Tether emphasizes that these forward-looking investments do not belong to the reserve assets supporting USDT, but reflect the company’s commitment to building a sustainable digital economy.
Regulatory Compliance Progress:
The first quarter of 2025 also marked Tether’s formal acceptance of regulation in El Salvador, obtaining a stablecoin issuance license under the country’s comprehensive digital asset regulatory framework. This regulatory milestone enhances Tether’s compliance image and reputation in the global market.
Dominance in the U.S. Dollar Stablecoin Market and Future Predictions
Tether’s CEO Paolo Ardoino stated, “The first quarter of 2025 showcases Tether’s continued leadership in stability, strength, and vision. With record U.S. Treasury holdings, growing reserves, strong profits, and higher global adoption of USDT, we remain focused on providing trust, transparency, and value to millions of users. Our mission is clear: to responsibly and compliantly drive the development of the digital economy and strengthen the role of the dollar on the global stage.”
It is worth noting that USDT and Circle’s USDC dominate the dollar stablecoin market, accounting for up to 87% of the global stablecoin market share. The U.S. Treasury estimates that the dollar-backed stablecoin market could reach $2 trillion by 2028.
However, EU officials and some financial institutions (such as the Bank of Italy) have also expressed concerns over the excessive reliance on dollar-denominated stablecoins and the underlying bonds, which may pose risks to the global financial system. According to the Bank of Italy, interruptions in the stablecoin market or underlying bonds could “affect other parts of the global financial system.”
Reference: Tether, Cointelegraph