Author: Zennon Kapron, Forbes
Compiled by AididiaoJP, Foresight News
On September 9, Tether and Fasanara Capital announced the launch of StableFund, a private credit fund with an initial capital commitment of $400 million from the two sponsors, aiming to raise up to $3 billion from third-party institutional investors. Tether serves as a co-sponsor, identifying financing opportunities related to USDT and providing stablecoin settlement infrastructure.
Note: Fasanara Capital is a global asset management firm headquartered in London, founded in 2011 by Francesco Filia, and currently manages approximately $6 billion in assets, focusing on fintech-driven private credit strategies.
The fund will lend to fintech platforms in over 60 countries, covering small business loans, consumer credit, trade receivables, and supply chain finance. The fund is registered in the Cayman Islands. However, the press release did not disclose how much of the $400 million was contributed by Tether, and Tether has not since revealed this information.
Six weeks ago, on July 31, Tether released its reserve report as of June 30. Total assets amounted to approximately $187.75 billion, and total liabilities were approximately $183.64 billion. The difference of $4.11 billion represents what Tether calls its "excess reserves"—the portion of reserve assets exceeding liabilities, serving as Tether's safety buffer.
This figure was still $8.23 billion on March 31, when Tether highlighted it as a record high in its press release headline. Within one quarter, excess reserves decreased by $4.12 billion, a 50.1% decline, while liabilities changed by only $106 million during the same period.
Looking at these two things together is worth further investigation.
Why has the excess reserve been halved?
Tether did not itemize the reasons for the decline, describing the quarter as "strong" in its press release. But the answer lies in the report from auditor BDO.
Tether's reserves are not just U.S. Treasury bonds. As of June 30, the reserve assets included:
- $114.96 billion in U.S. Treasury bonds
- $25.6 billion in reverse repurchase agreements
- $40.3 million in cash and bank deposits
- $18.84 billion in precious metals
- $5.8 billion in Bitcoin
- $3.76 billion in public equity
- $5.24 billion in other investments
- $13.45 billion in secured loans
The $6.5 billion money market fund held at the end of 2024 has been fully liquidated.
The issue lies with gold and Bitcoin. The gold price adopted by BDO fell from $4,668.06 per ounce on March 31 to $4,008.02 on June 30, a decline of 14.1%. Bitcoin dropped from $68,200 to $58,600.
Gold and Bitcoin together total $2.46 billion, while excess reserves amount to only $410 million. A 17% movement in either asset could eliminate the entire excess reserve buffer.
BDO's equity bridge data is more intuitive: the group's equity at the beginning of the year was $6.34 billion, the first-half financial results amounted to a negative $3.17 billion, and after adding $943 million in capital, the final equity stood at $4.11 billion.
For a company whose holdings in gold and bitcoin are six times its surplus, a 2.2% safety margin means: as long as the prices of gold and bitcoin continue to decline, the excess reserves will be further eroded, and the losses have not yet been fully recognized on the books.
Tether can point to $10 billion in profits for 2025 and an audited surplus of $6.814 billion to demonstrate its strength, but the trend is clear: one year ago, excess reserves accounted for 3.5% of liabilities; by the end of 2024, this rose to 5.2%; now it stands at only 2.2%. The decline is not due to user redemptions, but to asset depreciation.
It previously said it would eliminate the loan.
Now consider secured loans—loans issued by Tether to borrowers, backed by collateral.
In December 2022, following the FTX collapse, Tether pledged to reduce its secured loans in reserves to zero throughout the entire year of 2023. At the time, the value of these loans amounted to $6.1 billion.
But the actual figures are: $4.8 billion a year later, $8.19 billion by the end of 2024, $17.04 billion by the end of 2025, and $13.45 billion as of June 30, 2026. Tether refers to the $2.38 billion decrease as a "15% reduction."
$13.45 billion in secured loans is 3.3 times the $4.1 billion in excess reserves.
BDO has not disclosed the borrowers or the types of collateral. It describes the loans as "over-collateralized and monitored regularly," whereas the previous three reports stated they were "fully collateralized by liquid assets." The change in wording is noteworthy.
Excess reserves hit a record in the first quarter, halved in the second quarter, while Tether reduced loans it pledged to eliminate three years ago. In the third quarter, it launched a lending fund.
This is not its only new lending business. In January, Bloomberg reported that as of the end of June, U.S. precious metals dealer Gold.com had approximately $1.45 billion in debt to Tether, with Tether providing most of the financing for Gold.com’s $1.7 billion in precious metals leasing. In November, Tether stated it had issued around $1.5 billion in commodity trade credit and planned to “significantly expand.” In June, it announced with its invested lending platform Ledn that holders of XAUT gold tokens could borrow against them later this year.
Tether's position is that its investments are funded by the company's excess capital and profits and are fully segregated from USDT reserves. Secured loans are within the reserves; StableFund's capital commitments are likely outside the reserves. However, neither the StableFund press release nor the June reserve report explicitly states this.
The issue is not with concentration, but with role conflict.
Fasanara itself is not the issue. The company, co-founded by Francesco Filia in London in 2011, manages over $6 billion in assets and has been lending through fintech originators for a decade—exactly the business model described by StableFund.
Even if the isolation is real, the fact that every dollar Tether invested in the fund came from group equity does not resolve the issue. This is because Tether plays multiple roles within this structure: it is the sponsor, responsible for sourcing loans; it is the advisor, providing guidance to the fund holding the loans; and it also issues the funds transferred by the fund, operating on its own proprietary infrastructure.
Filia described Tether’s value as “the world’s largest stablecoin network, with a massive capital-capable crypto-native investor base and the USDT rail.” He told GTR that loans can remain in traditional currency, as “neither the loan itself nor the fund equity needs to be tokenized.” Tokens are merely used to transfer funds.
But once loans from StableFund—spanning 60 countries and involving consumer and small business loans distributed through 141 fintech originators partnered with Fasanara—encounter issues, Tether has reputational reasons to support them. And a decision by a company with only a 2.2% safety margin to provide support, regardless of which account the funds come from, is fundamentally a reserve issue.
Over the 90 days ending September 22, the circulating supply of USDT decreased by approximately $2.8 billion, or 1.5%. This is not a bank run. The Q3 reserve report will show the performance of excess reserves during the same period.
The rules Tether is bypassing
The GENIUS Act, signed on July 18, 2025, defines the permitted reserve assets for approved stablecoin issuers: cash, insured deposits, U.S. Treasury securities with remaining maturities of no more than 93 days, overnight repurchase agreements, and government money market funds. The scope is limited.
Section 4(a)(2) stipulates that reserves "shall not be pledged, re-pledged, or reused directly or indirectly by an approved stablecoin issuer," with only narrow exceptions. The Treasury’s proposed rule on issuance was released on August 18, with comments due by October 19, and the bill is expected to take effect on January 18, 2027.
Tether’s response is USAT—an independent token issued by Anchorage Digital Bank since January 27, designed for compliance. The same press release stated that USDT is “moving toward” compliance.
The bill establishes two key dates: Section 3(b) prohibits U.S. digital asset platforms from offering non-compliant stablecoins three years after the bill’s enactment (July 18, 2028); Section 18 permits foreign issuers to enter the U.S. market after the Treasury determines that their home country’s regulatory framework is comparable.
StableFund is precisely the structure the rule was designed to prevent, just assembled one layer outside the rule. The GENIUS Act does not prevent a foreign issuer’s parent company from initiating private credit using its own equity—it prevents reserves from being used for this purpose. This is why the undisclosed figures—how much and where Tether contributed out of the $400 million—are more important than the fund’s overall size.
The stablecoin issuer's commitment is to redeem at par value. When valuations move in the wrong direction, fulfilling this commitment relies on surplus. By the end of June, the surplus had dropped to $4.1 billion, half of what it was in March.
What should you pay attention to?
The Q3 Reserve Report is expected to be released around the end of October, with three key highlights:
First, will the excess reserves recover as the gold price rebounds? If gold and Bitcoin rally, the safety cushion may recover; if they continue to decline, pressure will intensify further.
Second, it is worth monitoring whether the collateralized loan program continues to decline or begins to rise again. Tether pledged to eliminate its collateralized loans three years ago, but the actual scale has instead grown. Whether this trend is reversing is significant.
Third, whether StableFund’s capital commitment appears in the reserve report or only in the group report determines whether there is a firewall between this funds and the USDT reserves.
Additionally, two other matters warrant attention. KPMG’s audit findings announced on August 13 for 2025 revealed a surplus $476 million higher than BDO’s report on the same date, but Tether has not yet explained the basis for this discrepancy—a reconciliation would be helpful. Furthermore, the U.S. Department of the Treasury’s comparability determination under Section 18 for foreign issuers serves as the gateway for USDT’s entry into the U.S. after 2027, and it must also address this question: Is an issuer that receives advisory services from a fund that originates private credit comparable to an issuer that is not permitted to do so?
The Q2 press release stated that reserves are strong. Perhaps so. But the point of a safety cushion is that it exists for the day when reserves are no longer strong. Tether lost half its safety cushion in a single quarter and responded by initiating private credit.