TL;DR
- Tether has engaged KPMG for the company's first full, independent financial audit of USDT reserves
- PwC has been brought in to strengthen Tether's internal systems and audit readiness
- The audit comes after over ten years of criticism, fines, and accusations of lack of transparency
- The US GENIUS Act and increased regulatory pressure are highlighted as key drivers
Tether takes a historic step towards transparency
After more than ten years of criticism, attestations, and half-hearted promises of a full audit, stablecoin issuer Tether has announced that the company has entered into an agreement with auditing giant KPMG to conduct its very first full, independent financial audit. According to Bitcoinist and the Financial Times, PwC is also involved, but in a preparatory role — they will help Tether structure and quality assure its internal systems so that they meet the requirements for an audit of this class.
According to available information, the audit will cover Tether's complete balance sheet, including digital assets, traditional holdings, tokenized liabilities, and — crucially — the company's internal controls. This is a significantly larger scope than the quarterly attestations Tether has previously published, where an accounting firm merely confirms a snapshot of stated documentation without independent, in-depth analysis.
"The audit represents years of work to strengthen our systems so that Tether can meet the highest standards in global finance" — Paolo Ardoino, CEO of Tether
A decade of criticism and unfulfilled promises
The background to the news is as important as the announcement itself. For many years, Tether has been the subject of strong criticism from analysts, regulators, and market participants who have called for precisely such an audit.
In 2017, auditing firm Friedman LLP was engaged, but the relationship ended in early 2018 without any full audit being delivered. Tether's then-legal director claimed at the time that an audit was "months away, not years" — a promise that remained unfulfilled for a very long time. As recently as August 2022, Tether's CEO reiterated that an audit was "likely months away," without this materializing.
Reserve composition has been controversial
A persistent concern has been what Tether's reserves actually consist of. According to research from S&P Global Ratings, risky reserve assets — including bitcoin, gold, secured loans, and corporate bonds — accounted for a full 24 percent of Tether's reserves as of September 30, 2025, up from 17 percent a year earlier. S&P concluded that bitcoin alone represented approximately 5.6 percent of USDT in circulation, which exceeded the reserve buffer of around 3.9 percent as stated in Tether's own Q3 2025 attestation.
S&P warned that a sharp fall in the bitcoin price could potentially make USDT undercollateralized. Tether CEO Paolo Ardoino flatly rejected the assessment, claiming that S&P operates with "legacy rating models built for a broken financial system."
Regulatory pressure as a catalyst
The timing is hardly coincidental. The US GENIUS Act, which came into force in July 2025, established the first federal framework for payment stablecoins in the USA. The law requires, among other things, 1:1 reserve backing, regular third-party audits, and formal licensing. In the EU, the MiCA regulation is fully applicable from 2025, and it is worth noting that Tether's USDT is not MiCA-compliant — which distinguishes the company from its competitor Circle, whose USDC meets the European requirements.
With a stablecoin market now exceeding $300 billion in total market capitalization — more than tripled since early 2023 — and transaction volumes estimated at $11 trillion in 2025, transparency and trust have become increasingly critical for the entire sector.
What does this mean in practice?
It is important to emphasize that the audit report itself has not yet been published. It is the announcement of the KPMG engagement that is new — not the result. The market and regulators will have to wait until the audit is completed and published before they can assess what it actually reveals about Tether's reserves and internal controls.
Nevertheless, the step itself represents a marked change of course for a company that for years has rejected demands for a full audit. Whether the KPMG audit will finally deliver the transparency critics have demanded since 2017 remains to be seen — but the signaling effect to regulators and institutional players is already significant.
